Stock of the Day – Whirlpool of India

Way back in 2009, after being range bound for nearly for nearly 10 years, Whirpool gave a breakout that gave investors a 5x return from the breakout level. After the massive break, the stock has been more or less on a downward journey though the stock is still trading at 3x from its breakout level. 

On the weekly charts, we can see the stock is trading in a fairly large descending triangle. While a descending triangle generally means that the probability of the stock continuing to go lower is high, I would wager out here that the probability of the upper trend line being broken has a much higher probability. 

There is no specific news for the company though the immediate trigger maybe the strong rise we are seeing in another peer stock – Symphony. I would not go into fundamentals too much other than to say that the company has delivered pretty strong ROE over the last many years and while not exactly cheap at a PE of 26, the MNC pedigree + peer valuations being higher may push the stock to higher levels. 

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About Prashanth

Have been a full time participant in the stock markets since 1996. Run a Yahoo Group where focus is exclusively on discussions of the Indian Markets using Technical Analysis as the tool (groups.yahoo.com/group/technical-investor)
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