Dilip Buildcon ended the day with a gain of about 11% after the Company bagged Rs 1,004 crore road contract from the National Highways Authority of India (NHAI) in Madhya Pradesh. Adding to it, Bank of America Merrill Lynch (BofAML) today initiated a coverage on the stock with a target price of Rs. 1,224. As a result, the stock broke out of a 14-week long consolidation base on huge volume.
I couldn’t refrain from commenting. Well written!
I like your honest advice
Is this stock to be bought at this price
Dear Jagat,
Thank you for reaching out to us. Dilip Buildcon broke out of a fourth-stage base pattern, which is generally risky in nature. While it is best to buy stocks when they break out of bases, it is smart to stay away from bases that form late in a stock’s long-term advance. After a stock has climbed from a third or fourth base, the odds of winning a substantial profit shrink considerably. That’s why investors need to avoid late-stage bases. Moreover, the stock is a bit extended from its ideal buy range.