ICICI Securities Ltd.

| Retail Equity Research

Technical Breakout
Texmaco Rail and Engineering (TEXRAI) (CMP- | 72)
Strategy: Buy Texmaco Rail & Engineering in the range of | 7269 for a target price of | 90 with a stop loss below
| 61.50 on a closing basis.
Breach of downward sloping channel signals change of guard from medium term trend perspective

The share price of Texmaco Rail & Engineering had been on a steady downward spiral since hitting an all-time high of
| 101.40 in July 2011. The stock lost more than 50% of its value from its July 2011 high before hitting a major trough
of | 48 towards mid-September 2012. The price decline since the start of 2012 had occurred in a well defined
downward trending channel formation as highlighted in the adjoining weekly candlestick chart.
The bounce back post hitting the low of | 48 in September 2012 saw the stock generate a faster retracement of the
preceding falling segment, thereby signalling a change in sentiment. In the process, the stock also ventured above all
its medium-term and long term moving averages. The initial up leg was followed by a round of sideways
consolidation just below the upper band of the falling channel. During the whole consolidation phase since October
2012 till date the stock maintained a higher peak and trough formation while trading closely above its medium and
long term moving averages, which reflects the positive sentiment.
The price action in the last few sessions has seen the stock venture past the consolidation range with strong
volumes, which has resulted in a breakout from the upper band of the medium term declining channel. The violation
of the down trending channel backed by strong volumes indicates a shift of momentum in favour of bulls from a
medium-term perspective.
Positive divergence on momentum oscillators

During the entire price decline since February 2012, the 14 week RSI has exhibited positive divergence as it made a
series of higher highs while prices were still in a declining mode and forming lower lows. The positive divergence on
momentum indicators suggests waning downward momentum and a potential reversal on the cards. The recent
price rise has led the RSI to move past its own intermediate resistance of 60-64 indicating strength in the current
breakout.
The measuring implication of the channel breakout i.e. the width of the channel (24 points) added to the breakout
point of | 67 project a medium term price target of | 91.





Key Technical Data
Recommended Price 72 - 69
Price Target 90
Stoploss 61.5
52 Week High 78.3
52 Week Low 45.35
50 days SMA 65.4
200 days SMA 58.2
52 Week SMA 62.5










Analyst
Dharmesh Shah
dharmesh.shah@icicisecurities.com

Nitin Kunte, CMT
nitin.kunte@icicisecurities.com

Dipesh Dagha
dipesh.dagha@icicisecurities.com

ICICI Securities Ltd. | Retail Equity Research


Page 2
Exhibit 1: Texmaco Rail & Engineering Ltd. Weekly Candlestick Chart

Source: Spider software, ICICIdirect.com Research

ICICI Securities Ltd. | Retail Equity Research


Page 3



Pankaj Pandey Head Research pankaj.pandey@icicisecurities.com

ICICIdirect.com Research Desk,
ICICI Securities Limited,
1st Floor, Akruti Trade Centre,
Road No 7, MIDC
Andheri (East)
Mumbai 400 093
research@icicidirect.com


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