Analysis: RCOM

Today’s pick is RCOM [stockquote]RCOM[/stockquote]. The stock started saw a rush to Rs. 110 levels in the starting of the year, but could not sustain the level, and started its downtrend to reach Rs. 50 by September. Since then the stock has been in an uptrend. In the last three months, the stock has moved +27% vs. +4% of the Nifty’s.

RCOM technical analysis chart

Oscillator RSI and CMO are closing in towards the over-sold territory. The stock is trading close to the lower end of Bollinger band giving an upward bias. Short-term technical just saw 18×9 bearish cross-over.

The MACD line and the signal line are moving parallel to each other and suggest the short –term downtrend to continue. Also, Long-term GMMA lines are starting to converge given the range-bound movement of the stock.

RCOM correlation chart

RCOM’s average correlation with the Nifty is 0.62 which is positive and strong. The scrip will be replicating movement of Nifty closely. [stockquote]NIFTYBEES[/stockquote]

RCOM volatility chart

RCOM has a historical volatility in the range of 0.4 to 1.0. The scrip’s volatility is currently in the middle of the range.

Given these technicals and divergences we suggest a short-term sell. For the long-term, we could take a call given the stocks ability to stick to the trend-line in place. However trailing stop-losses will be of help in case sudden trend-reversal were to take place.

Read what experts have to say about the Indian telecom sector here.


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