Stocks

Brigade Enterprises: Buy

Updated on: Feb 06, 2011

Investors with medium-term perspective can consider buying the stock of Brigade Enterprises (Rs 111.6). The company is a real estate developer that focuses on the development of residential, commercial and hospitality properties.

After encountering resistance at Rs 187 in January 2010, the stock reversed its trend and has been sliding lower. However after retracing 61.8 per cent Fibonacci retracement level of its prior up move, the stock found support around Rs 90 early last week.

On February 4, the stock opened with an upward gap and jumped 15 per cent accompanied with extra-ordinary volumes. This gap in the daily chart signals trend reversal and we name it as breakaway gap.

Moreover, the stock's recent trend reversal is also triggered by positive divergence displayed in the daily moving average convergence divergence and price rate of change indicators. It has also breached its 21- and 50-day moving average giving signs of bullishness.

The daily relative strength index has entered into the bullish zone and weekly RSI has entered in the neutral region from the bearish zone. Though, daily MACD is hovering in the negative territory, it has signalled a buy. Price rate of change indicator has entered into the positive area indicating buying interest.

We are bullish on the stock from a medium-term perspective. We believe that Brigade Enterprises has the potential to trend higher and touch our medium-term target of Rs 135, with slight pause around Rs 125. Investors can consider buying the stock while maintaining a medium-term stop-loss at Rs 101.

Follow up – Alstom Projects (Rs 579.6)

Following an initial decline to intra-week low of Rs 544, the stock bounced up to finish the week in positive note by gaining 2 per cent. Nevertheless, we re-affirm our bearish medium-term outlook and sell recommendation with target and stop loss mentioned last week.

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

Yoganand D.

BL Research Bureau

Published on February 06, 2011

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