Allied Digital Services

Investors with medium-term investment perspective can consider buying the stock of Allied Digital Services (Rs 259.8). The company provides IT infrastructure management and technical support outsourcing services. After recording a life-time low of Rs 73 in March 2009 the stock reversed direction and has commenced an up-move.

However within this trend, it was on a medium-term corrective downtrend from late August 2009 peak of Rs 279 to late March levels of Rs 210. The stock has recently breached its 21- and 50-day moving average and then down trend-line emphatically.

We notice that there has been an increase in volumes over the past three trading sessions. As the daily relative strength index is nearing the overbought levels and the stock price is facing immediate resistance at Rs 265, investors should exercise caution over the short-termThe weekly RSI has entered into the bullish zone and weekly moving average convergence and divergence crossover signals a buy.

We believe that the stock has the potential to move upwards to our price target of Rs 295 in the mediumterm, following a minor pause around Rs 270. Investors with medium-term horizon can consider accumulating the stock in the zone between Rs 247 and Rs 255, with stop-loss at Rs 223.

FOLLOW UP: ITD CEMENTATION INDIA (RS 239)

The stock gained Rs 5 or 2 per cent over last week.We reiterate our medium-term bullish forecast on the stock. Investors can stay invested with the target and stop-loss mentioned last week. (This recommendation is based on technical analysis. There is a risk of loss in trading.)

via BL