SPICEJET
BSE: 500285
Entry Price: 65 – 70
Time: 3 months to 1 year.
Now that Jet Airways has set the trend for all kinds of aviation stocks, everyone of them is playing catch up in the market. All of them are up at recent swings highs or past them. Spicejet is no exception, having risen above the site of the last major high of around 64 (made in Dec 2006). The ability of holding itself at the higher levels with sufficient high momentum is a positive sign. We hear from the media that performance of the aviation sector is set to improve owing to hike in fare prices, booming economy, route expansion etc. All this is what getting translated into prices, which appears.
Our readers may remember that we had covered this low cost domestic carrier from Royal airways (formerly known as Modiluft) about six months ago around 54 under same section for a short-term target of 65-70 and higher up to 85 /115. A look at the monthly chart below suggests that we caught the rally right as it was about to begin from the support of prior accumulation patterns breakout levels and those who followed might have reaped good quick returns, as it advanced to meet our short-term target of 65-70. From there the prices got caught in a range where in it was consistently struggling to clear the 38.2% retracement hurdle of its prior intermediate rising leg around 64 on the higher side. One of the problems in this counter was the lack of volumes which kept the traders out. So once again, it turned to be one of those counters that market simply gave up on. But just as you turn your eye away is when the market strikes. The stock made a subtle higher bottom formation around 45 in November 2007 and with the current month jump prices shifted its phase to bullish by overcoming its crucial hurdle of 64. It has now suddenly begun to perform along with the other mid and small cap counters. Volumes which being an essential element as discussed above saw a sharp flare up almost 4-5 folds. This kind of action denotes the entry of bigger players. It can only be funds. They would be buying as the sentiment and the scenario on the sector as a whole is turning positive. Momentum readings on all the time horizons have improved well in line with the positive developments seen in prices. Highlighted in the chart below is the RSI oscillator, which has been holding good support of 40 levels. This indicates that the uptrend is maintained to a large extent. With the recent run in prices
they have moved up well and therefore the chances for the stock to give the closing above 64 and hitting higher highs are brighter. With prices, volumes and momentum showing renewed strength on the charts, we conclude that the bigger picture is positive of this stock and thus we advise to remain positive across the medium term. Hence look to go long at current and on dip for newer higher targets of 85/115 now open up. One may continue to keep an ear to the ground to pick up some news that may help to crystallize the thinking to achieve higher targets.
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Tags: Less then 100, show the short term target price of spicejet, spicejet investment
Category: Medium Term, Midcap
