Week's recommendation: Buy Bombay Burmah, target Rs595

HDFC Sec | Jan. 9, 2015, midnight

Current Observation:


- The weekly timeframe chart of Bombay Burmah Trading Corporation (BBTC) is indicating a larger sideways consolidation over the last few months.


- The stock price has moved into a triangle type pattern (two brown converging trend lines) in the last few months and currently the stock price making attempt to move above the pattern around Rs.500 levels.


- We observe an excellent intermediate term upmove in the stock price in the sequence higher tops and bottoms from May-2014. After every consolidation or minor dips, the stock price moved up sharply over the period of time. Further upmove from here could lead to a beginning of new trended move from here.


- Weekly momentum oscillator like 14 period RSI is just moving above 60 levels. As per the formulation of RSI, it’s moving above 60 levels means sharp upmove expected in the underlying. Hence, this is indicating that the strength of uptrend is gathering momentum.


- The overall positive pattern in BBTC is showing a long trade set up for near term.

 

Recommendation:HDFC Securities recommends investors to buy Bombay Burmah between CMP of Rs478.05 and Rs440 for a target of Rs595 with a stop loss placed at Rs420 in 1-2 months.

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