Is it the right time to buy Eicher Motors stock?
Technically YES and here’s the argument -
First let us look at the chart
Source: Chartalert.com
Before the start of the year – Eicher Motors was trading at 200 dma i.e. near 1400 and in just 4 months – stock surged from 1400 to 2300 i.e. gains of 64%. That’s what leadership means.
Now, Stock is at Support Zone: BUYING Opportunity
The nervousness and sell off in the market has arrested the stock’s upmove and it seems to be in consolidation mode between 1960 and 2340. Right now – stock is trading right at the support level of 100 dma as well as horizontal line support of 1960.
One can easily assume a technical bounce from current levels to 2300 in next few weeks i.e. an upmove of 16%.
Road Ahead
The stock is at 100 dma. Technically, that’s a good place to be in. The overall market condition will determine whether this level holds or not. A decline below 1960 will set the stock for deeper declines to 200 dma i.e. 1800: must buy point. The stock is in strong earnings growth phase and has strong valuation support on the downside. The EPS estimates for CY12 is Rs. 150.
Investors can look to add the stock between 1800-2000 whereas traders can buy with a tight stop loss below 1940 on closing basis. Please do your own due diligence before trading/investment
