Investors with short-term perspective can buy the stock of IL&FS Transportation Networks. Since peaking out from its January peak of Rs 227, the stock has been on an intermediate-term downtrend, forming lower peak and troughs. Nevertheless, after recording its 52-week low at Rs 98.1 on September 19, the stock started to move sideways taking support at around Rs 100.

Witnessing buying interest, the stock jumped 5.7 per cent on Monday. Both daily and weekly relative strength indices are displaying positive divergence implying underlying trend reversal. Moreover, daily moving average convergence divergence and price rate of change indicators are also showing positive divergence. The daily price rate of change indicators is on the brink of entering the positive territory and daily MACD has signalled a buy.

Taking a contrarian view, short-term outlook is bullish for the stock. Its current up move has the potential of trending higher and reach the price target of Rs 111.5 or Rs 114 in the forthcoming trading sessions. Traders can buy the stock with stop-loss at Rs 104.6 level.

(Note: The recommendations are based on technical analysis. There is a risk of loss in trading.)

(This article was published on October 7, 2013)
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