Medium term view – West Coast Paper Mills Ltd. : IDBI Capital
West Coast Paper Mills Ltd (WCPM) is the flagship company of Kolkata based S K Bangur group, which also owns Rama Newsprint & Papers Ltd. The company is primarily engaged in manufacturing paper and pulp. Its products include various kinds of paper such as printing, writing and wrapping paper. It also supplies paper for industrial use and also manufactures cable products such as optical fibre cable and jelly filled telephone cables for the telecom industry.
This counter was seen hogging the limelight the whole of April 10 and during the first week of May 10 as well. Tracing back we find that prices after some heavy accumulation on the long term charts, from 1995-2002, finally saw a sharp breakout during first half of 2003. This breakout catapulted prices into a fresh sharp rally, reaching higher levels each time. The sharp advance was consistently holding support of 20-period EMA during any dips and bouncing up afresh each time. This led prices to move all the way to highs of 124 by Jan 08. Witnessing heavy profit booking at that high, prices topped out the same month and slipped into a razor sharp decline. This life time high was never tested again as the bears took over the reins and pushed prices to deep lows of 30 by Oct 08. Finding excellent support around 32 levels—that of prior primary bottom and also 78.6% retracement region of the last entire rising leg, prices managed to bottom out from the decline and were seen moving sideways on the support. After six months of consolidation, prices finally bounced back once again during May 09.
On the weekly chart attached here we find that the prior decline had been resisting the 24-period EMA all the way down and the same had been obstructing the prices on their attempt to rally as well. However the fresh upmove since May 09 managed to breakout from the same and using it as a support, was seen rallying excellently. However prices on reaching a high near 77 during Jan 10, which was the 50% retracement (green lines) of the down swing Jan 08—Oct 08, was unable to breakout from the same and plunged into a sharp fall thereafter. This fall broke thru the EMA support as well and moved lower. The 50%retracement (orange lines) of the last rising swing came to the rescue and managed to arrest the fall and send prices up once again during April 10. That month saw a sky rocketing advance that pushed prices above any obstacles along the way and hit a high of 100 by mid May 10. However around this region was a descending Gann line resistance (purple line) and that capped the rally and sent them down afresh.
Interestingly, volumes during the rally since April 10 have been huge whereas during the last two weeks correction has been quite low. This indicates that the bullish hold on the trend is still strong and prices will bounce back from supports. Momentum readings remain strong on all time frames. One can consider buying this one at current levels or dip towards 77-75 for a target of 124 (all time high) and further high towards 155-58.
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Category: Medium Term
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