BF Utilities: ‘In a fast lane’ - Technical Update

BF Utilities had been trading in a range between Rs362 and Rs420 since March 2012.

January 01, 1970 5:30 IST | India Infoline News Service
CMP Rs421, Target price Rs520, Upside 19.1%

In 2011, BF Utilities under-performed the broader market and consistently traded below its 200-DMA. But in January 2012, the stock made a vertical ascend and in the process broke out above its 200-DMA. 

From January to February 2012, the stock witnessed a massive ~68% rally with momentum oscillators entering over-bought zone. After an exuberant phase in late February 2012, the stock entered a period of consolidation.

There is no doubt that the underlying momentum is very strong. Traders are flocking to this counter to buy the stock on dips. Also, the buyers are coming in large numbers to buy at support levels. The counter has seen higher than average volumes in the last seven trading sessions as well.

BF Utilities had been trading in a range between Rs362 and Rs420 since March 2012. Since the stock has broken out above the upper trading band of the consolidation, the ongoing trading action should be termed as a bullish consolidation, which is most likely to break on the upside.

Currently, the stock is doing a balancing act around the 200-DMA. Technically, the 200-DMA is a critical level above which the bulls take charge and below which the bears look to take advantage. Incidentally, the stock is testing its 200-DMA for the first time after April 2011.

The daily chart of BF Utilities depicts a bullish ‘Inverted Head and Shoulder’ bottom formation with neckline placed at Rs408. Successive weekly close above the same is likely to ignite buying momentum in the stock.

We believe that the stock has formed a bottom at Rs365. A rebound from here is underway and further upside cannot be ruled out. Technical charts are appearing interesting from a long-term view. The longer term target for the stock is above Rs550. Every correction should be used as entry point. We recommend traders to buy the stock at current levels for a medium term target of Rs520. Maintain a stop loss of Rs365.

Daily Candle chart

Source: Amibroker, India Infoline Research

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