Investors with medium-term perspective can consider Educomp Solutions (Rs 243.3), a leading player in the school education space. Ever since peaking out at Rs 1,017 in October 2009, the stock has been on a long-term downtrend. But, it found support in the band between Rs 170 and Rs 180 in December 2011. Triggered by positive divergence in weekly relative strength index and weekly moving average convergence divergence indicator, the stock changed direction. The stock has been on a nascent medium-term uptrend since then. Further, we notice formation of an ascending triangle pattern in the stock signalling bullish reversal. On February 2, the stock broke out of this pattern by gaining 6 per cent with good volume. There is an increase in volume over the past three trading sessions. The stock is trading well above its 21 and 50-day moving averages. The daily RSI is featuring in the bullish zone and weekly RSI is inching higher in the neutral region towards the bullish zone. The daily MACD is moving higher in line with the stock price and is hovering in the positive terrain implying upward momentum. Both the daily and weekly price rate of change indicator are featuring in the positive area indicating buying interest.

We are bullish on the stock from a medium-term perspective. We believe that it has the possibility to continue its uptrend and touch our medium-term price target of Rs 285, following a minor pause around Rs 265. Investors with medium-term perspective can consider buying the stock with stop-loss at Rs 222.

Follow up – Sintex Industries (Rs 98.1)

The stock moved higher in line with our expectation. It has skyrocketed almost 18 per cent with good volume last week. Investors can take the profits off the table at this juncture as the stock is approaching our medium-term target of Rs 100.

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

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