Buy Titagarh Wagons around Rs 352-360: ICICIdirect.com

ICICIdirect.com is bullish on Titagarh Wagons and has recommended buy rating on the stock with a target of Rs 414 in its December 10, 2012 research report.

“The share price of Titagarh Wagons (TWL), a key player in the manufacture of railway wagons has been in a major downtrend since the November 2010 high of Rs 561. After hitting the major trough of Rs 292 in March 2011, the stock has been oscillating in the range of Rs 440–290 for the past 18 months. Between June and September 2012, the stock price hit the Double bottom around Rs 290 and rallied over the past couple of months to complete the Double bottom formation during last week. Last week, the share price rallied over 3% thereby completing the Bullish Double bottom formation. Pattern implication project upsides towards Rs 414 over the medium term. The price target is calculated by measuring the depth of the pattern (352-290 = 62 points) and adding the same to the break-out level (352 + 62 = 414). Volumes during last week were   the five week average, which indicates a larger participation and, therefore, validates the breakout.”

“The recent rally also produced a long term bullish technical signal as the 50 day moving average (334) has given a positive cross over above the 200 day moving average (326). In technical parlance, when a mediumterm moving average (50) crosses a longer-term moving average (200) from below, it is termed as a Golden Cross. It represents a major shift of direction from bearish to bullish indicating a bull market on the horizon The stock price is also challenging the long term bearish trend line, which runs from October 2010 highs of Rs 561. A breach of this trend line suggests change of hands from Bear to Bull.”

“A close examination of the weekly RSI reveals that when the stock was in a bear trend the weekly RSI tends to resist at the 60-62 mark. During the whole consolidation phase since March 2012 till date, the weekly RSI has remained below 60 mark while the recent up-tick at 64 in RSI suggests a change in trend. The weight of the aforementioned technical evidence leads us to believe that the share price of Titagarh Wagons is well poised for a rally and, therefore, provides a good opportunity for medium-term players. Buy Titagarh Wagons in the range of Rs 352-360 for a target price of Rs 414 with a stop loss below Rs 328 on a closing basis,” says ICICIdirect.com research report.

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