Trading pick of the week: Finolex Cables (₹358.5): Buy

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Investors with a medium-term perspective can buy the stock of Finolex Cables on minor corrective declines. Following a sharp fall in late February and early March this year, the stock registered a 52-week low at ₹165 and found support. Subsequently, the stock witnessed asharp reversal and has been on an intermediate-term uptrend since its March low. After two- -and-a-half month of sideways consolidation phase in the band between ₹265 and ₹320, the stock decisively breached the upper boundary in early December and continued to trend upwards. Short-term trend is also up for the stock. There has been an increase in daily volumes during the advance days since late November; this strengthens the uptrend.

 

The stock trades way above the 50- and 200-day moving averages. However, the stock encountered a key resistance at ₹360 in the last week and tests this barrier. On Friday, it advanced 3 per cent with good volumes, reinforcing the up-move. It advanced 5 per cent in the past week and has gained 16 per cent so far this month

Both the daily and the weekly relative strength indices are featuring in the bullish zone, backing the uptrend. Besides, the daily as well as the weekly price rate of change indicators are hovering in the positive terrain indicating buying interest. In the near term, the stock could test current resistance with a positive bias which is healthy. Overall, the medium term outlook is bullish for the stock. It has potential to trend upwards and reach the price targets of ₹400 and then to ₹420 with a minor pause at ₹400. Investors can buy on corrective dips with a stop-loss at ₹320.

Yoganand D

 



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