Puravankara Projects Ltd - Technical Report

Channel Break-Out

Puravankara Projects (PURVA) has been gyrating in a trading channel since December 2011. For the past 30 months, the stock remained sideways and during this long drawn consolidation phase, PURVA hit an intermediate high of Rs116 in early January 2013 facing resistance at its upper trend-line resistance. The stock then hit a low of Rs49.50 its 52-week low February 2014. Since hitting its low PURVA has bounced back sharply and this bounce has led to a “Channel Breakout” as the stock has breached past its upper resistance trend-line.

Negation of Bearish Pattern

During the sideways phase, PURVA went through a bearish phase had set up a Head & Shoulder pattern, (H&S) which is a bearish one. Bearishness was confirmed after the stock violated the neckline of the H&S formation, which was placed at Rs60, post the breach the stock fell by another 16% hitting 52-week low of Rs49.50. However, the decline was short-lived for just a few weeks as PURVA staged a smart comeback and surged over 100% to negate the Head & Shoulder Pattern.

All this goes to indicates that the stock is set for a fresh upside and projection of the channel suggests a potential target of Rs173 for PURVA in the medium term.

The RSI showing above 70 mark, indicates strength in the current up-move and loss of any kind of bearish momentum. In addition, there is a strong pickup in traded volumes adding credence to our bullish stance.

We advise traders and investors to BUY Puravankara Projects on every dip till Rs110 for a potential target of Rs173 in medium term. Maintain a stop loss of Rs98.5 on every long position.