Chart Focus - Advanta India – Buy

Yoganand D. | Updated on December 11, 2011


Investors with medium-term perspective can consider buying the stock of Advanta India (Rs 330.9), an agricultural seed producer. The stock has been on a long-term downtrend from its all-time high of Rs 1,740 registered in January 2008. However, its intermediate-term trend reversed after finding support at around Rs 208 this May. Triggered by prolonged positive divergence in daily moving average convergence and weekly relative strength index, the stock changed direction. Since the May trough, the stock has been on an intermediate-term uptrend. Following a 61.8 per cent Fibonacci retracement of this up move, the stock found support in late November at around Rs 300, which is also a key support level. Again prompted by a positive divergence in daily relative strength index and daily price rate of change indicator, the stock resumed its up move. On Friday, the stock surged 10.5 per cent accompanied by extra-ordinary volume, bouncing up from key support level of Rs 300 and moving above its 200-day moving average. We also notice bullish engulfing candlestick pattern formation, a bullish reversal pattern. The daily RSI has entering into the neutral region from the bearish zone and weekly RSI is hovering in the neutral region. The daily price rate of change indicator has entered in the positive territory implying buying interest. As the stocks intermediate-term uptrend is still in place and the stock reversing upwards from key support we are bullish on it.

We believe that Advanta India has the potential of trending upwards and reach our price target of Rs 400 with a likely minor pause around Rs 370 in the medium term. Investors with medium-term perspective can consider buying the stock with stop-loss at Rs 394.

(This recommendation is based on technical analysis. There is a risk of loss in trading.)

Published on December 11, 2011

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