Recommended from The Hindu Business Line : Bharati Shipyard (Rs 265.3): Buy

We recommend a buy in the stock of Bharati Shipyard from short-term perspective. It is apparent from the charts of the stock that it had been on an intermediate-term downtrend from its January 2010 peak of Rs 352 until it found support around Rs 205 in late August. However, the stock resumed its uptrend after taking support in the range between Rs 200 and Rs 205. Since then, the stock has been on a medium-term uptrend. Moreover, we notice formation of inverse head and shoulders pattern, which is bullish reversal pattern, in the stock spanning over the past four months.

The daily volume also supports this pattern. On October 25, the stock conclusively broke out of the neckline at Rs 250 by emphatically gaining six per cent with good volume. It has also penetrated 200-day moving average poised around Rs 254, reinforcing the uptrend.

The daily relative strength index is featuring in the bullish zone and weekly RSI is on the brink of entering this zone. Daily moving average convergence divergence oscillator has signalled a buy and is hovering in the positive territory. Our short-term forecast on the stock is bullish. We expect the stock to rally further until it hits our price target of Rs 270 or Rs 280 in the approaching trading sessions. Traders with short-term perspective can buy the stock while maintaining stop-loss at Rs 258.



From: http://www.thehindubusinessline.com/2010/10/26/stories/2010102653091300.htm