This stock has been an outperformer since August 2011. The third quarter numbers are out today and there is a lot of opinion floating around about valuation and where price could head.
Let’s take an objective look. Let’s repeat the exercise of identifying buyers / sellers. Have a look at the daily chart featured below.
Hope you notice where the rally off the August 2011 low was arrested. This run-up was halted right at the prior gap and the price is still traded below the July 8, 2011 swing high of Rs.3,024.
While this rally from August low is impressive, there is nothing to suggest that the major sellers at Rs.3,024 have been overwhelmed.
The last set of buyers were apparent near the Rs.2,400-2,530 range. As a trader, I would look for evidence of buying near Rs.2500, for initiating longs.
There are potential short trades, but the best short entry may be behind us. The logical stop loss for short trades should be at Rs.3,030 or at least at Rs.2,980.