Wednesday, August 24, 2011

Mastek - Buy on declines

Investors with short-term perspective can consider buying the stock of Mastek. It is apparent from the charts of the stock that it has been on a long-term downtrend since December 2009 peak of Rs 462. Intermediate- and medium-term trends are also down for the stock. However, the stock found support at its longer-term support band between Rs 90 and Rs 100 in early May this year and bounced up, triggered by prolonged positive divergence in daily as well as weekly moving average convergence divergence. Since then, the stock has been on a short-term uptrend.

On Tuesday, the stock jumped five per cent emphatically breaching its 21- and 50-day moving averages positioned around Rs 105. The daily MACD is featuring in the positive territory and weekly MACD is rising higher after signalling a buy. The 14-day relative strength index is on the brink of entering in to the bullish zone from the neutral region. Weekly RSI has recovered from oversold territory and is heading toward the neutral region indicating upward momentum.

The scrip gave negative returns during the last 1 year and is likely to be a pretty slow mover going forward.

Time Span Price Change %Change
Today 92.25 -1.10 -1.17
Week 94.40 -1.05 -1.11
Month 126.90 -33.55 -26.43
Three Months 100.15 -6.80 -6.78
Six Months 145.05 -51.70 -35.64
One Year 253.80 -160.45 -63.21

Considering the significance of the stock's long-term support and that its short-term trend is up, we are bullish on the stock. We anticipate the stock's up move to continue until it hits our price target of Rs 115 or Rs 118.5 in the forthcoming trading sessions. Traders with short-term perspective can buy the stock with a strict stop loss of Rs.80/-

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Ingenious Investor
Equity Research Division

Ravina Consulting
Pattamal Plaza
3rd Cross Kamanahalli

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