Medium Term Buy Recommendation – TVS Motor Company
Investors with medium-term perspective can consider buying the stock of TVS Motor Company (Rs 57.4). After bottoming out in January 2009 at around Rs 7.5, the stock was on a bull-run until it encountered long-term resistance around Rs 86 in November 2010. In February this year, the stock’s significant longer-term support band between Rs 48 and Rs 50 halted the stock’s subsequent downtrend from its November peak.
Thereafter, this support band consistently cushioned the stock from declining further till mid August. On September 2, the stock jumped almost 4 per cent accompanied with above average volumes, emphatically breaking through the upper boundary of the sideways range between Rs 50 and Rs 55. The stock is hovering well above its 21- and 50-day moving averages.
The 14-day relative strength index is featuring in the bullish zone and weekly RSI is inching higher in the neutral region towards the bullish zone. Signalling a buy, the daily moving average convergence divergence indicator is hovering in the positive territory. Weekly MACD is moving higher towards the positive territory. Both daily as well as weekly price rate of indicators are featuring in the positive territory implying buying interest. We are bullish on the stock from a medium-term perspective.
We believe that TVS Motor Company has the potential to trend higher in the medium-term and reach our price target of Rs 69, however, we don’t rule out a minor pause at around Rs 63. Investors with a medium-term perspective can consider buying the stock with stop-loss at Rs 51 levels.
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