Tata Chemicals Ltd - Express Idea

India Infoline News Service | Mumbai |

The stock on the weekly chart, has broken out from a descending triangle pattern, wherein lower highs have formed the upper line.

CMP Rs349, Target Rs403, Upside 15.5%

Descending Triangle
The stock on the weekly chart, has broken out from a descending triangle pattern, wherein lower highs have formed the upper line. The base line as acted as support level which is holding firm since May 2010. A breakout above Rs335 took the stock towards Rs366 in the first week of December 2012. Since then it has retreated to test the breakout levels and is trading above the same, providing a good entry point at current levels.

Support of 200-WMA
The downtrend in the counter from a peak of Rs446 finally came to an end in June 2012 and since then on multiple occasions, the stock has bounced back from its 200-WMA currently placed at Rs314.

Increase in volumes
The breakout in early December 2012 was accompanied with spurt in volumes, indicating delivery based buying. There is no doubt that underlying momentum is very strong. Traders are flocking in to buy at support levels.

Breakout above 200-DMA from a consolidation zone
On the daily chart, the stock has broken above its 200-DMA following a consolidation phase of 6 months.

Such back to back confirmation on short term and medium term chart supports our buying argument at current levels. Hence, we expect the stock to resume its uptrend and head higher towards the levels of Rs403. Maintain a stop loss of Rs314.

Weekly chart

Source: India Infoline Research, Tickerplant

BSE 713.30 [15.90] ([2.18]%)
NSE 711.30 [16.05] ([2.21]%)

***Note: This is a NSE Chart

 

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