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We recommend a buy in the stock of Future Capital Holdings from a short-term perspective. It is evident from the charts of the stock that its intermediate-term downtrend that started from its September 2010 peak of Rs 296 halted after finding support in the zone between Rs 130 and Rs 135 in February 2011. After taking support from this key support band once more in mid of March, the stock began to move upwards. This up move was triggered by the positive divergence in the daily moving average convergence divergence indicator and weekly relative strength index.
On Monday, the stock jumped nine per cent with extraordinary volumes conclusively penetrating its downtrendline and 50-day moving average. Moreover, the stock has broken through its immediate key resistance level of Rs 150. The daily RSI has entered into the bullish zone from the neutral region and weekly RSI has entered into the neutral region from the bearish, reinforcing the bullish momentum. Daily price rate of change indicator featuring in the positive area implies buying interest.
We are bullish on the stock from a short-term horizon. We expect it's up move to prolong until it reaches our price target of Rs 162 or Rs 167 in the ensuing days. Short-term traders can buy the stock with stop-loss at Rs 152.5 levels.
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