We recommend a buy in the stock of Essar Oil from a short-term perspective. It is evident from the charts of the stock that since taking support at its significant long-term base at Rs 46 in late August, the stock has been in a medium-term uptrend. In early October, the stock decisively broke through its key resistance and its 200-day moving average and continued its uptrend. The stock is hovering well above its 200 and 50-day moving averages. After testing its important near-term support at Rs 68, the stock resumed its uptrend by gaining more than 4 per cent accompanied by extraordinary volumes on Wednesday.

Moreover, the stock's medium-term up trendline is intact. The daily relative strength index has re-entered the bullish zone from the neutral region and weekly RSI is featuring in the bullish zone implying upward momentum. Both daily as well as weekly moving average convergence divergence indicators are hovering in the positive territory. The daily as well as weekly price rate of change indicators are featuring in the positive terrain as well, indicating buying interest.

Our short-term outlook on the stock is bullish. We anticipate that its uptrend will continue and reach our price target of Rs 75 or Rs 76.5 in the approaching trading sessions.

Traders with short-term perspective can consider buying the stock while maintaining stop-loss at Rs 70.2 levels.

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