Larsen & Toubro Limited - Technical Update

India Infoline News Service | Mumbai |

L&T has been vacillating within the ascending triangle pattern for almost 60 months during which the stock held on to its upward sloping support line since March 2009.

CMP Rs1,548, Target Rs1,864, Upside 20.4%

Larsen & Toubro (L&T) was trapped between two trend-lines; one was the “Upward Sloping Trend-line” and the other was the “Horizontal Resistance Line” that represents boundaries of the “Ascending Triangle Pattern”.


L&T has been vacillating within the ascending triangle pattern for almost 60 months during which the stock held on to its upward sloping support line since March 2009. On the upside, L&T attempted to breach the Horizontal resistance trend-line in November 2010; however, the attempt proved futile.


Finally, after going through a reliable phase of consolidation and witnessing gradual upswings, L&T has broken out from a “Multi-Year Ascending Triangle Pattern” which is considered to be bullish.


The stock has recently hit fresh life-time highs. Technical indicators and oscillators also provide clearer picture on potential up-moves, pointing to a possible strong appreciation in the medium term. The breach has been accompanied with strong up-tick in traded volumes, adding credence to the breakout.


With the stock’s primary trend pointing upward and given the above evidence, we recommend a BUY on L&T for a potential target of Rs. 1,864 in the medium term. We advise a strict Stop Loss of Rs. 1,390 on every long position.

BSE 1,221.40 2.10 (0.17%)
NSE 1,221.85 1.50 (0.12%)

***Note: This is a NSE Chart

 

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