Dec 14, 2012, 02.48 PM | Source: Moneycontrol.com
ICICIdirect.com is bullish on Tata Motors and has recommended buy rating on the stock with a target price of Rs 325, in its December 14, 2012 research report.
, ICICIdirect.com |
"Tata Motors has remained in a secular bull trend since bottoming out in the early part of 2009. It was among the first few stocks to surpass its 2008 peaks during the 2009-10 rally and has made significant strides since then. The stock was the first to bottom out during the 2010-11 decline as it hit a major trough of Rs 135 during September 2011 and, thereafter, rallied to record its all-time high of Rs 320 levels by April 2012. The subsequent decline from the all-time highs saw the stock retrace the September 2011-April 2012 rally by precisely 61.8%, which is also referred to as the Golden Fibonacci ratio as secular bull markets seldom correct more than 61.8%.
After a bounce back from the key retracement support, the price movement since September 2012 till date has occurred in a well defined symmetrical triangle formation between the range of Rs 285 to 245 levels. Symmetrical triangles are continuation patterns with converging trend lines that mark a consolidation phase after a rally.
Following the breakout, we expect Tata Motors to resume its northward journey after completing a sideways consolidation and head towards projected target of 325 levels over the medium term.
The price action in Thursday’s session saw the stock open with a bullish gap and pierce through the upper boundary of the triangle pattern. The price breakout was backed by healthy volumes, which were more than the 10 day average volumes indicating larger participation in the direction of trend.
Strategy: Buy Tata Motors in the range of Rs 283-275 for a target price of Rs 325 with a stop loss below Rs 258 on a closing basis," says ICICIdirect.com research report.
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