Investors with medium-term perspective can consider buying the stock of Kaveri Seed Company (Rs 421.2), an established producer of hybrid seeds for crops such as corn, sunflower, cotton, paddy and grain. After bottoming out at around Rs 115 in the first quarter of 2009, the stock has been on a long-term uptrend registering rising tops and rising bottoms.

Taking support at its key long-term base level at around Rs 300 this March, the stock resumed its primary uptrend and has since been on a medium-term uptrend as well. However, following a corrective decline from its life-time high of Rs 494 marked in late July, the stock found support at its long-term base zone between Rs 390 and Rs 400 last week. On August 19, the stock jumped 4 per cent taking support from the aforesaid zone. It has formed a bullish piercing line candlestick pattern, a bullish reversal pattern in that session.

Further, the stock has managed to close above its medium-term uptrend line that has been in place from this March and is in tact. Daily relative strength index has bounced back into the neutral region from the bearish zone. Though weekly RSI is hovering in the neutral region, monthly RSI is featuring in the bullish zone. Considering that the stock's medium-term uptrend line is in tact and it is reversing upwards from important support levels, we are bullish on Kaveri Seed Company. Besides, the stock's long-term uptrend is also still in place and in tact.

We believe that the stock has the prospect of trending northwards and touching our price target of Rs 490 in the medium-term. However, we do not rule out a small pause at around Rs 460 levels. Investors with a medium-term perspective can consider buying the stock with stop-loss at Rs 385 levels.

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

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