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We recommend a buy in the stock of Indoco Remedies from a short-term perspective. It is evident from the charts that from its life-time high of Rs 552 recorded in November 2010, the stock has been on an intermediate-term downtrend. However, presence of significant long-term support in the band between Rs 390 and Rs 400 cushioned the stock in early March. After vacillating in a broad range between Rs 390 and Rs 470 for more than five months, the stock blipped below this support last week and bounced back experiencing buying interest. Further, this upward move has been backed with positive divergence in daily relative strength index and price rate of change indicator. On Wednesday, the stock rose four per cent and closed above its 21-day moving average. Both daily and weekly RSI are inching higher in the neutral region towards the bullish zone. Daily moving average convergence divergence indicator signals a buy. We are bullish on the stock from a short-term perspective. We expect it to move north until it hits our price target of Rs 425 or Rs 440 in the ensuing trading sessions. Traders with short-term perspective can buy the stock with stop-loss at Rs 405 levels.
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