We recommend a buy in the stock of Finolex Cables from a short-term horizon. It is evident from the charts of the stock that ever since bottoming at Rs 21 in December 2011, it has been on long-term uptrend forming higher peaks and troughs. This March, the stock took support at around Rs 42 and resumed its long-term uptrend. It emphatically breached its 50- and 200-day moving averages in early July and is hovering well above them.
On Wednesday, it surged 7.5 per cent with extraordinary volume breaking through its key resistance at Rs 58. We notice that there is an increase in volume in the past three trading sessions. The daily relative strength index is featuring in the bullish zone and weekly RSI has entered this zone from the neutral region. Both daily and weekly moving average convergence divergence indicators are climbing higher in the positive territory implying upward momentum. Likewise, daily as well as weekly price rate of change indicators are hovering in the positive area, signalling buying interest.
Our short-term outlook on the stock is bullish. We anticipate its uptrend to continue and reach our price target of Rs 64.5 or Rs 65.5 in the forthcoming trading sessions. Traders with short-term perspective can buy the stock with stop-loss at Rs 60.2 levels.
(Note: The recommendations are based on technical analysis. There is a risk of loss in trading.)