Sizzling Stocks - Allcargo, ABG Shipyard:: Business Line

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Sizzling Stocks - ABG Shipyard (Rs 341.2)

The stock of ABG Shipyard skyrocketed 34 per cent in the previous week, as the Baltic Dry Index (BDI) gained more than 30 per cent in the previous two weeks. This index is the benchmark measure of shipping or sea freight rate across the globe. The stock was on an intermediate-term downtrend from its January 2013 peak of Rs 415, until it took support at around Rs 250 in late August.

After taking support again at this level, the stock bounced back sharply in the previous week. Moreover, it has conclusively broken out of a falling wedge and bottom reversal pattern. The stock has also breached its 50 and 200-day moving averages decisively. There is an increase in daily volume over the past four trading sessions.

However, the stock is currently testing a significant long-term resistance band between Rs 350 and Rs 360. A strong rally above this zone will pave way for an up move to Rs 400 and then to Rs 425 in the medium-term. Inability to surpass the resistance will confine the stock trading between Rs 300 and Rs 360. On the downside, an emphatic fall below Rs 300 will pull the stock down to Rs 250 level.

Allcargo Logistics (Rs 99.3)

The stock rallied 15 per cent with moderate volumes in the week ago. This was mainly on account of the company's announcement on Friday that it acquired 100 per cent stake in the US-based logistics company Econocaribe Consolidators Inc. The value of the acquisition is close to $50 million. Since bottoming out from the August low of Rs 60, the stock has been on a short-term uptrend.

But, the stock is now testing key long-term resistance range between Rs 100 and Rs 110. Its 200-day moving average is also placed within this range. Only a strong breakthrough of this resistance range will take the stock northwards to Rs 125 in the medium-term. But failure to breach Rs 110 will pull the stock down to Rs 90 levels. Key supports below Rs 90 are pegged at Rs 77 and Rs 68. An emphatic rally above Rs 125 over the medium-term will take the stock higher to Rs 140 levels.