ICICIdirect recommends buying Kernex Microsystems (India) in the range of Rs 51-49 for target of Rs 64 with stop loss of Rs 46 on a closing basis.
Commenting on the rationale, the stock broker said, "The share price is seen breaking out of a Bullish Double bottom reversal pattern and long term trend resistance placed at Rs 49 levels signifying a medium term bullish trend and, therefore, offering an opportunity to ride the same.
Earlier, after hitting a life lows around Rs 29 during March 2013 the stock has been vacillating in a broad range of Rs 49-29 over the past 14 months. Recently, during February 2014, the stock retested the lows of Rs 29 and, thereafter, made a sharp run up to Rs 48 levels supported by strong participation. A couple of week's consolidation near this key intermediate resistance resulted in an eventual breakout out of the Double bottom formation in Monday's trade suggesting further upsides.
Interestingly, the consolidation during early May 2014, after a sharp up move occurred above the rising 200-day EMA (currently placed at 40) indicating decent buying support above long term moving average and supports overall bullish price structure building up in the share price.
Volumes in Monday's trade alone have tripled (11.50 lakh) above the 50-week average (4 lakh shares per week) indicating strong participation at the time of break out. Even the consolidation during May has seen a decent built up in the stock as delivery based positions have been above 50% over the last two weeks.
Among momentum oscillators, the MACD indicator (E-12/26/9), which gauges the strength in an underlying price trend is seen rising above the trigger line for the first time since January 2013 indicating positive momentum returning in the stock.
The target price is projected at Rs 64 being the February 2013 swing high from where the stock price witnessed a major sell off and is, therefore, likely to act as a hurdle in the short run.''
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