Today’s pick is HATHWAY [stockquote]HATHWAY[/stockquote]. The stock has been on an uptrend since the starting of the year. It saw its 52 week high of Rs. 306 in December and since then has been undergoing a flag formation. In the last three months, the stock has moved +11% vs. +8% of the Nifty’s.
Oscillators RSI and CMO are hovering close to over-sold territory suggesting an imminent bullish move for the stock. The stock is trading in the lower end of Bollinger band directing stock towards a bullish move. Although, short-term technical just saw 9×4 bearish cross-over.
The MACD line and signal line are moving very close to each other and hence are unable to suggest any short-term direction. Long-term GMMA lines are fanning out from each other and hence are giving a bullish bias for the stock.
HATHWAY’s average correlation with the Nifty is 0.07 which is positive. The scrip will be not be replicating movement of Nifty. [stockquote]NIFTYBEES[/stockquote]
HATHWAY has a historical volatility in the range of 0.6 to 1.4. The scrip’s volatility is currently in the lower end of the range.
From a fundamental point of view, Globe Capital has a BUY on HATHWAY. They expect that the company will be in a better position to capture the growth opportunity led by the structural changes in cable distribution and implementation of digitization.
Given these technicals, we suggest a short-term BUY. Although, a longer term call in any direction could be taken once a decisive breakout from the current flag takes place. Also, we suggest having trailing stop-losses in case trend-reversal were to take place.
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