Buy FDC; target of Rs 133: ICICIdirect.com

ICICIdirect.com report on FDC

The share price of FDC had been consolidating in the narrow price band of Rs 96 to Rs 75 levels since July 2011 till November 2013. The stock registered a strong breakout from this 28 month consolidation range towards November 2013 signalling a change of guard from a medium term trend perspective.

The volume behaviour is in line with the Dow Theory principle, which states that volumes should expand in direction of the primary trend. The entire consolidation lasting over 28 months was on the back of thin volumes whereas the recent price breakout was accompanied with a sharp surge in volumes. Weekly average volumes during late November early December (15.50 lakh shares) were thrice the 52 week average volume (5.10 lakh shares).

After registering a strong breakout during late November 2013, the stock is currently seen moving sideways as bulls take a breather after the breakout rally to gather steam for a further upward march. The rally during late November and the current sideways consolidation have taken the form of a Flag pattern. A Flag formation is a bullish continuance pattern, which marks a temporary pause in an uptrend as bulls take a breather before resumption of the preceding up move. The price action in Monday’s sessions has seen the stock register a breakout from the Flag pattern with strong volumes.

Strategy: Buy FDC in the range of Rs 107.00-103.00 for a target of Rs 133.00 with a stop loss below Rs 98.00 on a closing basis.

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