Tuesday, July 5, 2011

V Guard - Buy

Investors with medium-term horizon can consider buying the stock of V-Guard Industries (Rs 225). The company is a leading manufacturer of voltage stabilisers and also manufactures water heaters, fans and low-tension power cables. After bottoming at Rs 38 in March 2009, the stock has been on steady long-term uptrend forming rising peaks and troughs.

However, the stock reversed direction since marking an all-time high at Rs 215 in early November 2010. It was on a medium-term corrective downtrend since then. After retracing 38.2 per cent Fibonacci retracement level of its prior uptrend, the stock found support from its long-term uptrend-line around Rs 146 in February 2011.

Medium-term trend is also up for V-Guard from this February trough. In late March, the stock conclusively breached its moving average compression (21, 50, and 200-day moving averages) around Rs 164 and in early April it emphatically broke through its key medium-term resistance at Rs 180. The 14-day relative strength index, which determines the speed and alteration of price movements, has re-entered in to the bullish zone and weekly RSI has entered in to this zone from the neutral region. Daily and weekly moving average convergence divergence indicators are featuring in the positive territory. Further, daily and weekly price rate of change indicators are hovering in the positive terrain signalling buying interest. Both long and medium-term uptrend-lines are in tact.

We are bullish on the stock from a medium-term perspective. We believe that V-Guard Industries has the potential to move higher and reach our medium-term price target of Rs 275, following a minor consolidation around Rs 200. Investors with medium-term horizon can consider buying the stock with stop-loss of 180

The stock did exceedingly well during the last 1 year. The details given below amply testifies this

Time Span Price Change %Change
Today 223.05 2.15 0.97
Week 220.05 0.85 0.38
Month 218.90 2.00 0.91
Three Months 173.70 47.20 27.17
Six Months 177.95 42.95 24.13
One Year 102.10 118.80 116.35

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