Edelweiss Financial Services
is one of the fastest growing financial services company.
The company is serving in the
areas of Corporate Credit, Insurance, Broking, Investment Banking and Wealth
Management.
The stock has been trading
below levels of 63.5 since June 2008 until Jan 2015. This is a period of 7
years after it broke below in Jun 2008. Stock tried to break above price of
63.5 in Nov 2010 and then in Jun 2014. Both the attempts failed.
This behaviour leads to a formation
of Rounding Bottom pattern on Technical Charts.
Rounding Bottom pattern
suggest a long revival period after a major setback to a company. The process
of revival was going on in case of Edelweiss since Jun 2008 till it broke out
of 63.5 levels in Jan 2015.
The breakouts in case of
rounding bottom suggest that stock will gradually lead to its high price which
was there just before it fell heavily prior the formation of rounding bottom.
In case of Edelweiss this high is also an all time high at 179.50.
After breaking out of
resistance at 63.5 in Jan 2015 the stock could not sustain above it. We can
attribute the reasons of non-sustenance to falls in broader Indian markets and
global markets.
As you can see on Monthly
chart enclosed with this article, the stock is again trying to move above the
resistance near 63.5. Today it is trading near Rs 70. For medium term buyers
who are willing to wait for a period of 1-2 years the stock has potential to
earn more that 100% returns from current level.
I have also enclosed daily
chart with support and resistance levels. Short term traders can buy this stock
at current level and accumulate till levels of 62 (if it corrects till that
level). In short term the stock has potential to reach to price of 98. That can
gives us returns of 30%.
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