Talbros Auto Components – Buy

Investors with medium-term horizon can consider buying the stock of Talbros Automotive Components (Rs 87.7). The company manufactures gaskets, steering and suspension components, stampings, rubber products and forgings.

After recording multi-year low of Rs 15 in March 2009, the stock reversed higher. Since then it has bee on a long-term uptrend shaping rising peaks and troughs. While trending higher, the stock strongly broke through key long-term resistances at Rs 45 and Rs 60. Further, it penetrated another long-term resistance at Rs 80 on October 1, by jumping 15 per cent with heavy volume.

In bullish zone

The stock is trading well above its 21 and 50-day moving averages. Both daily and weekly relative strength indices are featuring in the bullish zone and also monthly RSI hovering in this zone. The daily moving average convergence divergence oscillator has re-entered in to the positive territory and has given a buy signal. The weekly MACD is featuring in the positive territory, implying upward momentum.

Medium horizon

Taking into consideration that the stock's long-term uptrend line is in tact, we are bullish on it from a medium-term horizon. We believe that Talbros Automotive has the potential to continue its current uptrend until it hits our price target of Rs 105, following a small pause around Rs 97. Medium-term horizon investors can buy the stock while maintaining stop-loss at Rs 79.

Follow up- PBA Infrastructure (Rs 84.9)

Following initial gain to Rs 94.6, the stock slipped 6 per cent last week and is trading above our stop-loss. We reiterate our medium-term positive outlook on the stock with revised target of Rs 100. Medium-term investors can buy the stock with modified stop-loss at Rs 76.

(This recommendation is based on technical analysis. There is a risk of loss in trading.)

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From: http://www.thehindubusinessline.com/2010/10/04/stories/2010100451780100.htm