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We recommend a buy in the stock of J.B. Chemicals & Pharmaceuticals from a short-term horizon. It is seen from the charts of the stock that following a medium-term downtrend from its December 2012 peak of Rs 89, the stock found support in the range between Rs 71 and Rs 74 in late March. Subsequently, the stock started to move sideways in the broad band between Rs 74 and Rs 86.
After testing the lower boundary at Rs 74 which is also a significant long-term support, for more than two weeks, the stock jumped 8.8 per cent with good volume on Wednesday. This rally has breached the stock's 21- and 50-day moving averages. The stock’s sideways consolidation is positive from a long-term perspective. The daily relative strength index is on the brink of entering the bullish zone from the neutral region and weekly RSI is inching higher in the neutral region.
The daily moving average convergence divergence indicator has signalled a buy. Both daily and weekly price rate of change indicators are featuring in the positive area implying buying interest. We are bullish on the stock from a short-term perspective and expect it to test the upper boundary. Our short-term targets are Rs 84 or Rs 85.5. Traders with short-term horizon can consider buying the stock while maintaining stop-loss at Rs 78.6 levels.
( Note: The recommendations are based on technical analysis. There is a risk of loss in trading.)
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