Investors with medium-term perspective can consider buying the stock of Jyothy Laboratories (Rs 216.6), a household products manufacturer. Since bottoming out in October 2008 around Rs 42, the stock has been on a long-term uptrend. However, after registering a life-time high at Rs 321 in October 2010, the stock reversed direction.
It was on a corrective decline until it found support at its long-term base level in the band between Rs 190 and Rs 200 in early February 2011. This support band is just above the stock's 50 per cent Fibonacci retracement level of its prior up-move. The stock has been taking support from this band consistently since February this year. The stock price movement since then has been a sideways consolidation phase in the broad range between Rs 190 and Rs 240.
On June 17, the stock surged more than 7 per cent with good volumes breaching its 21- and 50-day moving averages as well as its downtrend-line that was in place from late October 2010. The daily relative strength index has entered in to the bullish zone from the neutral region and weekly RSI is rising higher after bouncing higher from 40 levels. Both daily as well as weekly moving average convergence divergence indicators have signalled a buy. The daily price rate of change indicator has entered in to the positive territory indicating buying interest.
The stock has been giving steady returns to investors during the last 1 year and is likely to do better going forward
| 1 week | 2 week | 1 month | 3 month | 6 month | 9 month | 1 year | |
| Price | 241.70 | 217.65 | 204.15 | 212.25 | 237.50 | 305.25 | 282.85 |
| Gain / Loss | -1.63% | 9.24% | 16.46% | 12.01% | 0.11% | -22.11% | -15.94% |
SMAs
| Days | BSE | NSE |
| 30 | 219.80 | 219.70 |
| 50 | 214.14 | 214.03 |
| 150 | 224.93 | 225.09 |
| 200 | 238.82 | 238.98 |
Our medium-term outlook on the stock is bullish. We believe that Jyothy Laboratories has the potential of moving upwards in the medium-term and touch our price target of Rs 260, following a small pause around Rs 240 levels. Investors with medium-term horizon can consider buying the stock with stop-loss of 200 for a target price of 260
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Ingenious Investor
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