Pick up cement stocks during minor decline

Mayur Shah

The Sensex has again exhibited a higher intermediate bottom as it moved past its earlier minor top indicating that the major trend of the Sensex is likely to be up. The major uptrend would be confirmed once the Sensex closes above 3760 in the current intermediate uptrend.

Many stocks have also zoomed ahead and have gone into a fresh intermediate uptrend indicating that the intermediate trend of the Sensex is up and is less likely to fizzle out as it happened in the last week due to UTI. This means that investors have got a good opportunity to pick up long positions in selective stocks.

Those stocks which have gone into a fresh intermediate uptrend in the last week and may react in the coming week could be some of the best opportunities for investors and traders.

Any minor decline at this stage would be an excellent opportunity for picking up long positions in relative strength stocks.

A few sectors in the old economy have been outperforming the Sensex for some time indicating that they have been either reducing at a lower rate as compared to the Sensex or are well above their earlier intermediate bottoms.

One such sector is the cement sector. Many stocks in this sector have been exhibiting a bullish relative strength and are likely to exhibit higher levels once the Sensex also gains momentum in the current intermediate uptrend.

Investors must look at the stocks in these sectors and must start picking up in the minor decline in the coming week.

ACC
ACC has gone into a fresh intermediate uptrend along with the Sensex, but is currently facing a strong resistance at the 30 WMA. However, the stock has exhibited higher intermediate top and possibly the major trend of the stock will be up.

This will be confirmed once the stock closes above 164 in the current intermediate rise. The relative strength line for the stock is moving sideways just above its zero line but should improve once the stocks moves higher intermediate current intermediate rise.

The daily momentum indicators for the stock is above its trigger line while the weekly momentum indicator is below its trigger line and is moving closer to it.

Investors can pick up long positions in the stocks in the minor decline which has just started. Traders can use a stop-loss of 132 for the long positions that they pick up in the coming week.

Grasim Industries
Grasim Industries is in a major uptrend but the stock has been facing a strong resistance between 340 and 350. The intermediate trend of the stock is up and a breakout above 350 with a rise in volume will give an excellent momentum to the stock on the upper side.

Investors must hold on to the long positions in the stock and more fresh long positions in the stock can be picked up either when the stock breakout of the 350 strong resistance or when it pulls back towards the 30 WMA in the minor decline in the coming week.

The relative strength line for the stock is staying above its zero line indicating that the stock is outperforming the Sensex and the line will start moving higher once the strong resistance between 340 and 350 is crossed.

Gujarat Ambuja
Gujarat Ambuja is in a major uptrend, but the stock is currently facing a strong resistance at its earlier intermediate top and has been receiving a support at the 30WMA.

The stock will have to move past the 205 level with a spurt in volume to confirm the continuation of the major uptrend while fall below 171 will mean that the major trend of the stock is down. The stock’s 30 WMA has flattened out and once the major trend of the stock is confirmed, the 30 WMA shall start moving higher. The weekly momentum indicator of the stock is also moving sideways.

Thus investors must pick up long positions of the stock on a breakout above 171 or on a pull back towards its support of 171. The relative strength of the stock is above its zero line but has started moving lower in the short term recently.

India Cements
India Cement is in a major downtrend as the stock is exhibiting descending intermediate tops and bottoms. The stock is well below its falling 30 WMA and investors must stay away from the stock.
The relative strength line for the stock is below its zero line and has been exhibiting lower tops and bottoms indicating that the stock is underperforming the indices.

The performance of the stock is weak and the stock is one of the lagers. Stay away from the stock.

Larsen & Toubro
Larsen & Toubro has recently gone into an intermediate uptrend and will confirm a major uptrend if the stock is able to move past 258.80 in the current intermediate rise.

The daily momentum indicators for the stock have turned up indicating that the intermediate trend of the stock is up while the weekly momentum indicators are moving closer to the trigger lines.

The 30 WMA for the stock has been moving sideways and will start moving higher once the major uptrend is confirmed. Investors may currently take up long positions in the stock in the minor decline in the coming week and if the stock is able to move past 259, than they may convert the long positions into investments.

Other wise they can book trading profits and wait for the stock to exhibit higher intermediate bottom.

The relative strength line for the stock has moved closer to its zero line but on the short term it has started improving as the stock has recently gone into an intermediate uptrend.