Friday, January 20, 2012

VIP Industries - Buy


We recommend a buy in the stock of VIP Industries from a short-term perspective. It is evident from the charts of the stock that following a steep decline from its life-time high of Rs 204 marked in September 2011, the stock found support around Rs 74 in December 2011. But, it subsequently changed its direction triggered by positive divergence in daily relative strength index and its weekly indicators reaching oversold territory.
Since December trough of Rs 74, the stock has been on a short-term uptrend. While trending higher, it breached its 21-day moving average. On January 12, the stock jumped nine per cent penetrating its immediate resistance at Rs 88. Further, it has advanced 4.6 per cent, strengthening its uptrend on Wednesday. The stock's short-term uptrend is backed with good volume during advance sessions.
The daily RSI is on the brink of entering into the bullish zone from the neutral region and weekly RSI is about to enter into the neutral region from the bearish zone. The daily moving average convergence divergence indicator is moving in line with the stock price, supporting the uptrend. Also, daily price rate of change indicator is hovering in the positive terrain implying buying interest.
We are bullish on the stock from a short-term perspective. We anticipate the stock to trend higher and reach our price target of Rs 101.5 or Rs 104 in the ensuing trading sessions. Traders with short-term perspective can consider buying the stock with stop-loss at Rs 95.
Our Recommendation :
The stock has spiked recently from levels of Rs.85 to 110 in a short span and might even look to cross Rs.120.  Existing traders should exit the stock above Rs.120 and buy on steep declines to 95 levels.
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Ingenious Investor
Equity Research Division

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