J.P.Associates ltd. pace of economy

After making the top of INR 180 in october 2009, the stock of J.P.Associates corrected by a massive percentage points of almost 84 from tops. This retracement took the stock to the lowest levels of INR 28.35 in August 2013.

Around those bottom levels we witnessed very heavy activity in the counter with very good volumes and indicators indicating an oversold territory. So from thereon
the price of J.P. associates moved up by almost 100% to the levels of INR 58 in December 2013. After that what we witnessed was a re testing of those bottoms again by the stock but the bottom formed was a higher one compared to the earlier one.

Here we immediately take in to consideration the moving averages. 13 DEMA is @40.35, 48 DEMA is @ 44 and 200 DSMA is @ 48.25. RSI on daily charts is at the levels of 50. Volumes in last few trading sessions were also very good.

So here on daily charts though moving averages are showing negative trends, but if we read them minutesly taking in to consideration last few fortnights averages we find that actually they are showing signs of strenthning and of course the RSI is in to positive territorry supporting the same findings.

So immediatly we may find some resistance around the belt of INR 44 to INR 48, but the stock will eventually gather momentum to cross that belt of resistance in short to medium term. On daily charts, after analyzing the technicals we believe that the dip in the stock price should be used to accumulate and should not panic. Because the charts on weekly basis are supporting this theoram of buy on declines.

If we closely look at the charts on weekly basis we will find that in near term in last few weeks this stock has made a very good bottom with very good volumes and that is been supported by very good patterns on Japanese candlestick charts patterns. One of the patterns is a hammer at the bottom and the other pattern is an engulfing candle at the bottom. Both these pattern at the bottom suggest some good moves are expected in short to medium term and a rising RSI is also indicating the same though for RSI it can be said that it still not supporting the rise or up move fully.

But the volumes, while bottom formation, suggests that a good bottom is already in place and penetration of that bottom for a new lower bottom formation is very – very remote. So for long term investors it is good news.

Taking in to consideration the above discussed facts, we can conclude that long term investors can accumulate this stock on every decline from the current levels and the target for long term investors could be first INR 60 and next INR 80.

But achieving these targets one has to stay invested for 12 – 18 months. For short term traders it’s a two way move still, as it has to face resistance in INR 44 – 48 belts and a very good support in INR 40 – 36 ranges.

As the moving averages on weekly charts are still showing negative trend, we suggest that accumulation for long term should be done slowly and keeping in mind the levels given as above. No stop loss is required for long term accumulation.