If charts to be believed and technical parameters indicate really true picture of what could be the shape of things to come in future, than this stock of COAL INDIA should outperform all indices in the future in the Indian equity markets in the long term.
From the top of INR 422 formed in May 2011, this stock of Coal India witnessed a continuous downtrend in its price moves and
the stock made its all time low at the bottom of INR 238 in August 2013. That correction was well spread and lasted long enough to test the willpower and strength of the market players and ultimately formed the bottom with almost 44% fall from the highest levels that were hit at INR 422.
From the bottoms of INR 238 that were formed in August 2013, stock made a very good and speedy up move till the levels of INR 315, but could not hold on to those higher levels and came down steadily again to test the bottoms around the previous levels and this time, in February 2014, though the bottom hit was very near to the old bottom, but it was little bit higher and was formed at the levels of INR 240. So that was a clear cut indication of higher bottom, with clear tint of double bottom formation, which spells good news for the stock.
On Japanese candlestick patterns, on monthly charts, the stock is ready to form a very good bullish pattern. Volumes are also steady since last few weeks indicating strength in the counter. RSI on near and medium term charts is in positive territory and indicates some positive moves in the stock price in near term. RSI on long term charts, though still in negative territory, is indicating that things are going to take positive shape in long term too as RSI is on the verge of almost entering the positive territory in next one quarter.
Short term moving averages are still below the long term moving averages, but the trend is certainly indicating a reverse in the position and soon all short term indicators are expected to cross the long term ones positively.
A correction by almost 44% from the top of INR 422 was witnessed till the levels of INR 238. So in order to arrive at possible target or resistance levels we now calculate the reverse way. A 22% up move from INR 238 comes at the levels of INR 291 and a 44% up move from bottom comes at the levels of INR 342. So these two levels will be of prime importance in terms of target levels or the probable resistance levels in next or coming up move.
A horizontal line across all time zone charts is giving us the two important levels and they are INR 294 and INR 332.
Percentage retracement theorem is indicating that the stock shall face resistance at the levels of INR 308, INR 330 INR 351 and INR 377. And it should get strong support at the levels of INR 273, INR 265 and INR 240.
Now after going through all the details as discussed above, we hereby, are in a position to conclude that the stock of COAL INDIA will be a good outperformer in the medium to long term and we will also get some very good positive moves in short term as well.
From the CMP of INR 286, we believe the trades initiated with positive bias will give very decent returns in short term as well as in long term. So our strategy will be buy and execute trades in this stock.
Immediate resistance will be @ INR 294 followed by @ INR 308, INR 332 and finally @ INR 351. A decisive crossover of the level of INR 351 with very good volumes and with four consecutive daily close, two consecutive weekly close and one monthly close will pave the way for the stock for a grand BULL run which will take the stock to all time new high surpassing the previous high. But for this to happen, stock will need at least two to four quarters time from current date.
Support for the stock will come in at the levels of INR 273 followed by another close support at the levels of INR 265. Final support for the stock could be the levels of previous bottom that is near INR 240.
Equity: 6316 cr Promoter’s stake: 90% book value: 33
March 2013 EPS: 15.50 Dividends: 140% Special Dividend: 290%