Buy DCB around Rs 44.50-46.50; target Rs 61: ICICIdirect
ICICIdirect.com is bullish on Development Credit Bank (DCB) and has recommended buy rating on the stock with a target price of Rs 61, in its November 30, 2012 research report.
December 01, 2012 / 15:03 IST
ICICIdirect.com is bullish on Development Credit Bank (DCB) and has recommended buy rating on the stock with a target price of Rs 61, in its November 30, 2012 research report.
"Waking up from hibernation: Share price of DCB, a national mid-sized player in the commercial banking space, has been oscillating at Rs 52-37 for the past nine months. With the recent upsurge in benchmarks, risk appetite seems to be returning in many midcap stocks. This is evident from the price chart of DCB as well.Breakout from Triangular consolidation: After hitting a major trough of around Rs 30 in December 2011, DCB rallied to the highs of Rs 56 during February 2012 before surrendering over 70% of the December 2011 – February 2012 gains. The stock hit the lows of Rs 36.60 in early June 2012 and then went into sideways consolidation for the last four months. Pictorially, the entire price action since February 2012 took the shape of a contracting triangle, which is usually a trend continuation pattern. Triangles form as part of the secondary price correction within larger trends. The recent price breakout above Rs 46 suggests that the consolidation seems over and the stock price is ready for the next leg of medium term uptrend. The Triangular consolidation breakout has also seen the stock post a weekly close above the long term bearish trend line, which was in place since the November 2011 peak and connects the intermediate highs of July 2011, February 2012 and October 2012. A breach of the long term supply line indicates that a larger down trend in the stock may be over and a fresh up-trend is about to begin. Volume expansion above the past five week’s average at the time of the break out indicates larger participation in the stock and further boosts the confidence about the validity of the break out.Among indicators, the MACD on the weekly chart has remained in the positive terrain during correction and is trending up now suggesting inherent strength in the underlying trend. Pattern implication of the Triangle suggests the larger leg of the pattern be measured and price move of similar magnitude may be expected from
the break out level. In case of DCB, the largest leg measures 15 points (51.85 - 36.60). If this is added to the break out level of Rs 46, this projects
an upside target of Rs 61 over the next several weeks.Strategy: Buy DCB in the range of Rs 44.50-46.50 for a target price of Rs 61 with a stop loss below Rs 41 on a closing basis," says ICICIdirect.com research report.Institutional holding more than 40% in Indian cos Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.To read the full report click on the attachment 
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