Wednesday, July 20, 2011

Kalyani Steels - Sell

We recommend a buy in the stock of Kalyani Steels from a short-term perspective. It is apparent from the charts of the stock that since peaking out in August 2010 around Rs 156, it has been trending downwards. While trending down, the stock formed a falling wedge pattern spanning between late November 2010 and late May. Generally falling wedge patterns are continuation patterns. However, in few cases, it also portrays a bottom formation. In this case it is a bottom reversal pattern.

The stock found support around Rs 72 and bounced up changing its direction last week. This reversal is backed by the positive divergence in the weekly moving average convergence divergence indicator.

Our short-term outlook is bearish on the stock. We anticipate its current decline to prolong until it reaches our price target of Rs 65 or Rs 68.5 in the approaching.


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