Investors with medium-term perspective can consider buying the stock of Sun TV Network (Rs 291.7), among the largest media conglomerates that offers television channels.
After registering a 52-week low at Rs 214 this October, the stock bottomed out, triggered by positive divergence in weekly relative strength index and daily moving average convergence divergence indicator. Since then, the stock has been in a sideways consolidation, forming an ascending triangle pattern. This pattern acts as a bottom reversal pattern in this scenario, with top horizontal line at Rs 292. The daily volumes support the pattern formation.
On December 23, the stock jumped 5.7 per cent accompanied by above average volume, breaching its 21- and 50-day moving averages. However, the stock is currently testing the ascending triangle pattern's top horizontal line.
The daily RSI is on the brink of entering the bullish zone from the neutral region and weekly RSI is inching higher in the neutral region. The daily MACD has signalled a buy and is moving higher in line with the stock price. Both daily and weekly price rate of change indicators are featuring in the positive area implying buying interest.
Considering the stock's formation of an ascending triangle pattern and other bullish signals, we are optimistic aboutthe stock from a medium-term perspective. We believe that Sun TV Network has the potential of breaking through the horizontal line and trend higher to reach our price target of Rs 350 in the medium-term.
However, we don't rule out a minor pause at around the stock's 200-day moving average around Rs 330 while trending higher. Investors with medium-term perspective can consider buying the stock while maintaining stop-loss at Rs 260.
Follow up – Andhra Bank (Rs 84.1)
The stock declined in the previous week in line with our expectation. It fell almost 6 per cent. We reiterate our medium-term bearish outlook on the stock with stop-loss and price target stated in last week.
(This recommendation is based on technical analysis. There is a risk of loss in trading.)