On Wednesday, the stock of Shipping Corporation of India

On Wednesday, the stock of Shipping Corporation of India gained 4 per cent accompanied by above average volume, decisively breaching its immediate key resistance at around Rs 35. Since recording a multi-year low at Rs 26.25 on August 6, the stock reversed direction and has been on a short-term uptrend. This reversal was triggered by the positive divergence in daily moving average convergence divergence (MACD) and weekly relative strength index (RSI). While trending higher, the stock emphatically breached its 21- and 50-day moving averages in early September and is hovering well above them.

We notice that the progressing uptrend has been backed by good volumes in the advance sessions. The daily RSI has entered the bullish zone from the neutral region, and weekly RSI is inching higher in the neutral region. Further, the daily MACD has been trending upwards in line with the stock price since early August, implying upward momentum.

Both daily and weekly price rate of change indicators are featuring in the positive territory indicating buying interest. Our short-term outlook on the stock is bullish. We expect its uptrend to continue and reach our price target of Rs 38.5 or Rs 39.5 in the forthcoming trading sessions. Traders with short-term perspective can buy the stock with a stop loss at Rs 35.5 level.

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

(This article was published on September 25, 2013)
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