Wednesday, February 17, 2010

Stock Chart Pattern - IRB Infrastructure (An Update)

The stock chart pattern of IRB Infrastructure had made a classic bullish double-bottom pattern when I had taken a look at it in the beginning of June last year. Based on the double-bottom pattern, I had indicated a minimum target of 229.

It is time for an update. Let us have a look at the 9 months bar chart pattern of IRB Infrastructure:-

IRB Infra_Feb1710

The stock hit 161 on Jun 5 '09 and immediately dropped to 125. That level provided good support and the stock resumed its upward climb on growing volumes, as indicated by the OBV.

The stock made a high of 227 on Aug 27 '09 - almost meeting the minimum target mentioned within a short span of 3 months - before going into a 5 weeks long sideways consolidation between 200 and 220.

It broke upwards on decent volumes on Oct 6 '09 and eventually went on to make a high of 280 on Nov 19 '09. A corrective move saw the stock make a low of 233 on Dec 18 '09. A high volume breakout on Jan 8 '10 saw the IRB stock make another high at 280 on Jan 14 '10.

The chart pattern thus formed a bearish 'double-top' and it is no wonder that the stock once again entered a corrective phase. If you had entered at lower levels, this would be a good time to book partial profits. The minimum downside target from the double-top is 186.

The bulls are still in control as the stock price is just above the 20 day and 50 day EMAs and well above the 200 day EMA. The MACD is barely positive. The RSI is slightly above the 50% level.

The company is apparently doing quite well and year-end Mar '10 should see a sharp increase in profits as road toll revenues from completed BOT projects start to kick in. High promoter holding and negligible public float could lead to wide price fluctuations.

Bottomline? The stock chart pattern of IRB Infrastructure is showing some tiredness after an excellent rally. Taking some profits home is never a bad idea, particularly when the stock appears to have run ahead of its valuations.


Unknown said...

could you review this stock which seems to have hit its 52 week low of 242 on bse

Subhankar said...

The stock has made a bearish rounding-top pattern and has slipped below its 50 day and 200 day EMAs.

It has a long-term support at 230-240. If it breaches that support, it can drop to 200.