Henkel India

Investors with medium-term perspective can consider buying the stock of Henkel India (Rs 56.3).

The company operates in laundry, home care, cosmetics, toiletries and hair care segments. The stock formed a strong base by consolidating sideways in the band between Rs 11 and Rs 13 from November 2008 and March 2009. Since then, it has been on an intermediate-term uptrend. However, after forming a medium-term downward channel from Rs 55, Henkel found support around Rs 32 in late March.

The stock thereafter resumed its uptrend by penetrating through its moving average compression (21, 50, 200-day moving averages) around Rs 35 in early April. In the third week of May, the stock almost jumped 27 per cent breaking through its important medium-term resistance level of Rs 50.

The stock is currently trading well above its long-term resistance band between Rs 40 and Rs 45 that will now cushion any declines.

We observe good weekly volume in the stock over the past two weeks. Both daily as well as weekly relative strength indices are featuring in the bullish zone. Further, the daily and weekly moving average convergence and divergence indicators are hovering in the positive territory, reinforcing the bullish momentum. Our medium-term outlook on the stock is bullish. We believe that Henkel has the potential to head higher to our medium-term price target of Rs 78 in the upcoming weeks. Investors with medium-term perspective can consider buying the stock with stop-loss at Rs 45.

Follow up- GAIL (Rs 447.2)

The stock slipped Rs 5 or 1 per cent from our recommended price level. However, it is trading well above the stop-loss specified last week. We re-affirm our medium-term bullish outlook on it. A decline below our medium-term stop-loss would negate the bullish outlook.

via BL