Investors with medium-term perspective can consider buying the stock of Coromandel International (Rs 297.9), a fertilisers manufacturer. The stock has been on a long-term uptrend since March 2009 low of Rs 40. However, encountering resistance at Rs 358 in July 2011, the stock started to decline and was on a medium-term downtrend until it registered a 52-week low at Rs 253 in mid-December last year. After forming a strong base between Rs 253 and Rs 265, the stock began to trend higher in February. Thereafter, the stock moved above its 21- and 50-day moving averages and is hovering well above them. On March 1, reinforcing the bullish momentum the stock penetrated a key resistance at Rs 280 jumping 4.5 per cent with good volume. The daily relative strength index is featuring in the bullish zone and weekly RSI is inching higher in the neutral region towards the bullish zone.
Both daily as well as weekly price rate of change indicator are hovering in the positive territory signalling buying interest. Since late December 2011, the daily moving average convergence divergence indicator has been moving higher in line with the stock price implying upward momentum. We are bullish on the stock from a medium-term perspective. We believe that Coromandel International has the potential to trend northwards and reach our medium-term price target of Rs 340, with a minor halt at around Rs 320. Investors with medium-term perspective can consider buying the stock with stop-loss at Rs 275.
Follow up – NCC (Rs 58.6)
The stock was volatile and fell 1.8 per cent in the previous week. However, the medium-term outlook remains bullish for the stock. We reiterate our buy recommendation in the stock with stop-loss at Rs 53 and price target of Rs 72.
(This recommendation is based on technical analysis. There is risk of loss in trading.)