Chart Focus: Fedders Lloyd Corporation: Buy

Yoganand D. BL Research Bureau | Updated on March 13, 2011


Investors with medium-term perspective can consider buying the stock of Fedders Lloyd Corporation (Rs 81.7). After bottoming out in early 2009 at the low of Rs 15.3, the stock has been on a long-term uptrend forming higher peaks and higher troughs.

However, it encountered resistance around Rs 114 in late October 2010 and was on a medium-term downtrend until it found support at its long-term base level of Rs 70 in early February 2011.

Triggered by positive divergence displayed in the weekly relative strength index, daily moving average convergence-divergence (MACD) and price rate of change indicators, the stock changed direction in February. It has been on a short-term uptrend since then.

Recently the stock breached its 50-day moving average and is hovering well above it currently. Moreover, last week the stock penetrated its downtrend-line that was in place from October 2010.

The daily RSI is on the brink of entering the bullish zone and weekly RSI has entered in to the neutral region from the bearish zone. Daily MACD as well as price rate of change indicator has entered in to the positive territory implying upward momentum and buying interest.

We are bullish on Fedders Lloyd Corporation from a medium-term perspective. We believe that the stock has the potential to trend higher to our price target of Rs 95 in the medium-term, with small pause around Rs 90. Investors with medium-term perspective can consider buying the stock with stop-loss at Rs 75.

Follow-up: OnMobile Global (Rs 220.3)

The stock advanced in line with our expectation last week by gaining 6 per cent accompanied by good volumes. We re-affirm our medium-term bullish outlook on the stock with target and stop-loss mentioned last week.

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

Published on March 13, 2011

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