Buy Raymond; target of Rs 545: ICICIdirect

ICICIdirect.com`s research report on Raymond“The share price of Raymond is seen to be emerging out of the two year rounding pattern as highlighted in the adjoining weekly chart. The entire price action since December 2012 till date has taken the form of a well defined rounding bottom characterised by the downtrend from December 2012 till September 2013 (Rs 476 to Rs 175) followed by a gradual and resolute recovery from October 2013 till date. A rounding bottom is formed when the market sentiment shifts from bearish to bullish at a steady pace. The pattern usually forms at the end of an extended downtrend as the entire selling pressure gets absorbed at the base of the rounding formation while prices move sideways for an extended period, which is known as time wise correction. Since the pattern occurs over an extended time horizon it indicates steady accumulation by stronger hands while prices form a base after a correction. This often acts as a launch pad for a fresh uptrend.” “A strong rally off the May 2014 low of Rs 289 saw the stock apprehend the neckline of the rounding pattern placed around Rs 470 levels in July 2014. Profit bookings from the neckline area saw the stock retrace its May-July rally by 50% at the August 2014 low of Rs 377. The stock formed a bullish Hammer candle on the weekly chart precisely at the 50% retracement support and bounced back to challenge the neckline at the start of this week. We believe the stock is set to register a breakout past the neckline of rounding pattern and usher in a medium term trend reversal • Following the price breakout, we expect the stock to enter a sustainable uptrend and head towards Rs 557 levels in the medium term. The price equality of the current up from August 2014 low of Rs 377 with the May-July rally (289 to 469 = 180 points) projects upside towards Rs 557 levels over a medium term horizon.” “The momentum oscillators on weekly/daily time frame remain firmly poised and support the positive developments on the price front. The MACD indicator, which gauges the underlying momentum in price, has consistently sailed above its nine period average since generating a positive crossover during September 2013 highlighting the bullish underpinnings. Buy Raymond in the range of Rs 468.00 – 458.00 for a target of Rs 545.00 with a stop loss below Rs 417.00 on a closing basis,” says ICICIdirect.com research report.

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