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We recommend a buy in the stock of Essar Ports from a short-term perspective. It is seen from the charts of the stock that following an intermediate-term downtrend from its June 2011 peak of Rs 125, the stock found support at around Rs 47 in December. But the stock appears to have bottomed out, triggered by positive divergence in weekly relative strength index and moving average convergence divergence indicator.
Since December 2011 low, the stock has been on a short-term uptrend. While moving northwards, the stock penetrated its immediate key resistance at Rs 54 in the second week of January. On Monday, reinforcing the up move, the stock advanced almost six per cent accompanied by above average volume. The stock is hovering above its 21- and 50-day moving averages.
We observe that there is an increase in volume over the past five trading sessions. The daily RSI has entered into the bullish zone from the neutral region and weekly RSI is inching higher in the neutral region. The daily MACD is moving higher in line with the stock price and is likely to enter the positive territory.
We are bullish on the stock from a short-term perspective. We anticipate its rally to continue and reach our price target of Rs 66.5 or Rs 68.5 in the ensuing sessions. Traders with short-term perspective can consider buying the stock with stop-loss at Rs 62.
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