Sunday, March 17, 2013

Tata Global Beverages - Buy on Declines !


We recommend a Buy in the stock of Tata Global Beverages from a long-term horizon. It is apparent from the charts of the stock that after marking a new high at Rs 181 in mid-November 2012, the stock reversed direction. This reversal was triggered by negative divergence in weekly relative strength index and daily moving average convergence divergence indicator. Since then, the stock has been in a short-term downtrend.

Last week, the stock breached its 21- and 50-day moving averages decisively and has been hovering well below them. The stock fell by 3 per cent reinforcing bearish momentum in the previous week. On Wednesday, the stock appears to have breached its key support at around Rs 130 by declining more than one per cent. The daily RSI has entered the bearish zone from the neutral region and weekly RSI is declining in the neutral region. The daily MACD is sloping down, in line with the stock price and featuring in the negative territory implying downward momentum.

Our short-term outlook for the stock is bearish. We expect its decline to prolong and reach our price target of Rs 115 or Rs 124 in next 2 weeks .   After hitting a 52 week high of Rs.181 the stock has been declining which is now near to the 6 months low of 127.

Smart Investors  with long-term perspective can consider buying  the stock with stop-loss at Rs 100 levels.

Smart Investor
Equity Research Division

Ravina Consulting
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