Sunday, April 6, 2008

Medium term investors - Watch out these 5 stocks!

Over the last 3 months several stocks have lost badly from their previous highs. Some of them have shed more than 70%. In the current market situation, let us now focus our attention on 5 stocks that are likely to move upwards for medium term.

Broadcast Initiatives:

This stock was truly for the bears. From a listing high of 140 it was thrashed to a low of 37 in early November. It got doubled from this level and made a high of 74 in first week of December last year. Last week the stock made a low of 21.60.

The above chart is drawn on a semi logarithmic scale on the Y axis. It can be observed that the stock has made a new low. A long black candle (this is the computer age so displayed as red) was followed by a hammer and this was followed by a white candle (green). It is to be noted here that as the stock broke the support and closed below, prices fell and volumes had increased. The stock has ultimately found support at 21.60. The support level of 37 will now be the resistance for the stock. Once it breaks this, a technical target of 54.40 can be looked at.

Cummins India:

The stock had fallen from 472.80 in September 2007 to 255 in February 2008. It was between this period the Nifty climbed from 4500 to 6300. If we draw a support trendline between the previous low points, the stock had just managed to penetrate this line but never closed below it. A bullish three inside up candlestick pattern has been formed this week. Note that the entire range of green candle is within the range of red candle. The medium term target works out to 390.

Inox Leisure:

This stock is extremely oversold in the weekly chart. It was all the way up during December but has been beaten down terribly. Last week's low of 80.80 had broken the long term support at 86.15; however the stock did not close below it. In this case too, a bullish three inside up pattern has been formed. The shadows of green candle extend beyond the low of red candle as in the case of Broadcast Initatives. Technically 107 is the first hurdle for the stock. Once it crosses this level on a weekly close basis one might expect a target of 142.

ITD Cementation India:

Like Broadcast Initiatives, this stock has also found a new low and a bullish three inside up candlestick pattern has been formed after a typical sell off. It trades at 367 now but exactly a year ago it made a high of 1569. This is a good example of how investor wealth could be eroded very quickly in the stock market. Currently 392.65 will act as a strong resistance for the stock. A weekly close above this is required for the stock to target 466 and 522. This stock is also highly oversold in the medium term charts.

Mangalore Refinery & Petrochemicals:

The stock had a dream run last year as it went up from 32 to 148 between April and November. But in the last 3 months it has fallen heavily and it is consolidating now. Both long term and medium term charts have been shown above. The stock broke its long term resistance at 69.15 during September 2007 and it nearly doubled in the next three months. However, it lost almost 43% during January 2007 alone. The monthly chart indicates that the stock never closed below 69.15, indicating strong support. In the weekly chart, a bullish three outside up pattern has been formed, suggesting a possible medium term reversal. Technical targets for the stock are 94 and 115.