Buy Inox Leisure; target of Rs 144: ICICIdirect.com

ICICIdirect.com report on INOX Leisure

The most important observation on the price chart of Inox Leisure  is that the entire consolidation spanning almost four years from February 2010 to December 2013 took the form of a Cup & handle formation. A cup & handle forms as a continuance pattern, which marks the corrective action after a powerful advance. As the cup (rounding bottom) gets completed, a trading range develops on the right hand side and the handle is formed. A subsequent breakout above the neckline (|92) formed by connecting the cup and handle’s upper band signals a continuance of the prior advance

A strong advance in the first half of December 2013 saw the stock register a strong breakout above the neckline of the cup & handle pattern placed at |92 levels. After the initial burst of momentum during the price breakout from cup and handle pattern in first half of December 2013, the stock is seen taking a breather while moving in the range of |121-107 levels since mid December 2013 till date. This sideways consolidation has taken the form of a Flag pattern which is a bullish continuation pattern. The price action in the last couple of sessions has seen the stock register a breakout past the short term flag pattern and therefore provides fresh entry opportunity to ride the further upward moves

Based on the aforementioned technical evidences, we believe that the stock has entered a medium term uptrend and therefore the recent Flag breakout offers fresh entry opportunity to ride the intermediate up moves. The price equality of the current move from January 2014 low of |109 with the preceding upmove (86 to 121 = 35 points) projects a medium term price target of |144 levels

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