We recommend a buy in the stock of Jubilant Life Sciences from a short-term perspective. It is seen from the charts of the stock that it has been on an intermediate-term downtrend since encountering resistance at Rs 224 in September 2011. Medium-term trend is also down for the stock. However, short-term downtrend appears to have reversed as the stock breached its downtrendline by jumping almost five per cent on Tuesday.

We observe that there is an increase in volumes over past two trading sessions. The stock's long-term support in the zone between Rs 155 and Rs 160 provided base for it during late July and August this year. Both daily as well as weekly relative strength indices are moving higher in the neutral region. The daily moving average convergence divergence indicator has signalled a buy. The daily price rate of change indicator has entered the positive territory implying buying interest. We take a contrarian stance on the stock from a short-term perspective as the stock is reversing higher from key long-term support and has breached its downtrendline as well as 21-day moving averages. We expect the stock's up move to continue and reach our price target of Rs 171 or Rs 176 in the approaching trading sessions. Traders with short-term perspective can consider buying the stock with stop-loss at Rs 160.

(This article was published on August 28, 2012)
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