Ambuja Cem: Trading Buy Target: 175
Ø The prices of Ambuja Cements has been steadily rising since recent low of 149-150 its medium term momentum indicators is still healthy for further up move. Any evidence of fatigue is not evident yet. On daily chart RSI indicator is also showing strong signals that makes upside momentum reliable.
Ø Ambuja Cements after trading in a range between Rs 149-153 for some time, stock has given a break out and closed above 50DMA @ 157.30 and move past same could extend the buying momentum.
Ø The Delivery Volume in the Stock Stands at 48% average for the month of Jan indicating good accumulation in the name. Market also expects cement prices to increase this month as peak construction season starts.
Ø On Fundamental side Cement industry’s dispatches increased 13.4% YoY in December 2011 indicating that the up cycle is gaining strength. Demand has mainly picked up in the past two quarters with revival in rural demand and demand from infrastructure projects in poll-bound states as incumbent governments focus on infrastructure development.
Ø From derivative perspective open interest in the stock is up stands at 7.6mln shares which is half from its peak of 18mln shares indicating very low leverage position in the stock(see the Chart Attached). Stock has been comfortably sustaining above 200 DMA. The stock can continue with its rise and can see a price target 175-180
Ø We Suggest going LONG on Ambuja Cement at CMP with Price Target of 175-180.
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