Monday, July 18, 2011

Ramky Infra - Avoid

Investors with medium-term perspective can consider buying the stock of Ramky Infrastructure (Rs 281.9), an infrastructure constructor and developer.

From its all-time high of Rs 460, registered in early October 2010, the stock had been on a medium-term downtrend until it found support around Rs 242 in early February 2011. The stock changed its direction thereafter and started consolidating sideways in a broad range between Rs 242 and Rs 310.

Key support at Rs 242 provided base during mid-March and the stock bounced up triggered by positive divergence in weekly relative strength index.

Recently, the stock took support around Rs 255 and started to move higher, with in the sideways range. On May 27, the stock jumped 6 per cent, breaching its 21- and 50-day moving average, showing initial bullish signals. We notice that there is an increase in volumes in past two trading sessions.

The daily relative strength index is hovering around 58 and is on the brink of entering in to the bullish zone, whereas the weekly RSI has re-entered in the neutral region from the bearish zone. The daily moving average convergence-divergence indicator has signalled a buy and is moving in line with the stock price. We also see the daily price rate of change indicator entering in to the positive territory indicating buying interest.

Our medium-term outlook in the stock is bullish. We believe that Ramky Infrastructure has the potential of trending higher and reaching our medium-term price target of Rs 330 following a small pause or sideways movement around Rs 310. Investors with medium-term perspective can consider buying the stock while maintaining stop-loss at Rs 258.

The following returns table gives the price movements

Particulars Week 1M 3M 6M 1Y 2Y 3Y 5Y

Net Change3.05-3.40-6.30-22.65


Our Recommendation - for Ramky and Infra stocks Avoid

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