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We recommend a buy in the stock of C & C Constructions from a short-term perspective. It is apparent from the charts of the stock that it has been on an intermediate-term downtrend from its October 2010 peak of Rs 277. From this April peak of Rs 167, the stock had been on a medium-term downtrend until it found support in the band between Rs 70 and Rs 80 on June 20. This band is a significant long-term support for the stock. However, the stock changed its direction thereafter, triggered by positive divergence in daily as well as weekly relative strength index.
On Thursday, the stock jumped 12.5 per cent penetrating its medium-term downtrend-line and managed to close above its 21-day moving average showing signs of bullishness. We notice that there has been an increase in volumes over the past four trading sessions. The daily RSI has recovered from oversold levels and entered in to the neutral region and weekly RSI is recovering from the oversold territory. Further, daily moving average convergence divergence indicator is displaying positive divergence backing the trend reversal.
We take a contrarian stance on the stock and are bullish on it from a short-term perspective. We expect its up move to prolong until it reaches our price target of Rs 96.5 or Rs 99.5 in the approaching trading sessions. Traders with short-term horizon can buy the stock with stop-loss at Rs 91.
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