J.K. Cement (Rs 109.9): Buy

jkcement.eps



We recommend a buy in the stock of J.K. Cement from a short-term perspective. It is apparent from the charts of the stock that it has been on an intermediate-term downtrend from its 52-week high of Rs 199 marked in October 2010. Further, its medium-term trend is also down since it encountered resistance at Rs 140 this April. However, the stock's decline found support at its long-term base level at around Rs 100 recently.

On Wednesday, the stock jumped eight per cent, forming a bullish engulfing candlestick pattern which signals a bullish reversal. Moreover, this up-move was triggered by a prolonged positive divergence in daily moving average convergence divergence and weekly relative strength index. We observe that there has been an increase in volumes over the past four trading sessions.

The daily RSI is inching higher in the neutral region towards the bullish zone and weekly RSI is on the brink of entering into the neutral region from the bearish zone. Taking a contrarian stance on the stock we are bullish on the stock from a short-term perspective. We anticipate the stock to move higher until it touches our price target of Rs 113.5 or Rs 117 in the approaching trading sessions.

Traders with a short-term perspective can buy the stock with stop-loss at Rs 107 levels.

Published on July 20, 2011

Related

This article is closed for comments.
Please Email the Editor