We recommend a buy in the stock of Essar Ports from a short-term perspective. It is apparent from the charts of the stock that after encountering resistance at Rs 106 in late November 2012, the stock started to trend downwards. Since then, the stock has been on a medium-term downtrend. In late January, the stock breached its key support at Rs 92 and continued to decline. However, it found support at around Rs 80 and changed direction triggered by positive divergence in daily moving average convergence divergence indicator.

Near-term trend is up for the stock. We observe that there in an increase in daily volume in the past two trading sessions. Both daily and weekly relative strength index are moving higher in the neutral region. The daily moving average convergence divergence indicator has signalled a buy. Further, the daily price rate of change indicator has entered the positive area implying buying interest.

Taking a contrarian stance on the stock, we are bullish on it from a short-term perspective. We expect its near-term rally to continue and reach our price target of Rs 91 or Rs 93 in the forthcoming trading sessions. Traders with short-term perspective can consider buying the stock with stop-loss at Rs 85.80 level.

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