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We recommend a buy in the stock of IL&FS Engineering and Construction Company from a short-term perspective. It is apparent from the charts of the stock that after taking support around Rs 50 in August, the stock reversed its direction. This reversal was triggered by positive divergence in daily moving average convergence divergence indicator and significant support at around Rs 50. Since August trough, the stock has been on a budding medium-term uptrend.
On Wednesday, the stock rose 5.6 per cent, decisively closing above its 200-day moving average positioned around Rs 63. We observe that there is an increase in daily volumes over the past three trading sessions. The daily relative strength index has entered into the bullish zone and weekly RSI is inching higher in the neutral region towards the bullish zone. The daily MACD is featuring in the positive territory implying upward momentum. Both daily as well as weekly price rate of change indicators are hovering in the positive terrain indicating buying interest.
We are bullish on the stock from a short-term perspective. We anticipate the stock's rally to prolong and knock our price target of Rs 71.5 or Rs 73 in the approaching trading sessions. Traders with short-term horizon can consider buying the stock with stop-loss at Rs 67.
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