Saturday, 23 December 2017


Article by : Prof. Tamal Datta Chaudhuri, Principal, Calcutta Business School,

Rural Electrification Corporation has a net worth of Rs.33326 crore, has a turnover of around Rs.23000 crore and a net profit of around Rs.6200 crore. It has a Price/Book value per Share of 1 and a P/E multiple of around 4.64. It has healthy track record of dividend payment and consistent profitability.

Figure 1 indicates that from 2014 to 2017, the trend line is flat, and after trending for some time, prices have fallen. It is trading way below the 200 DMA (red) and 100 DMA (blue), and the current price has intersected the 30 DMA (green) from above. The stock is currently in a bear grip and for me, it is good time to enter the stock.

Figure 1

From an oversold position, Figure 2 indicates that MACD is still giving sell signal and RSI went below the 30 level. It is an ideal time to buy the stock. Parabolic SAR also is giving buy indications. We will never be able to time entry into a stock, but given the indicators, the current price looks attractive for buy.

Figure 2

Figure 3

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