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We recommend a buy in the stock of Hindustan Oil Exploration Company from a short-term perspective. It is apparent from the charts of the stock that in February it peaked out encountering resistance at Rs 152 and started to decline. Following a medium-term downtrend, the stock took support at its long-term base between Rs 95 and Rs 100 in mid-May this year. Triggered by positive divergence in daily relative strength index and moving average convergence divergence indicator, the stock changed direction.
It has been trending upwards over past three weeks and has emphatically breached its 21- and 50-day moving averages. On Wednesday, the stock jumped 6.4 per cent with above average volumes decisively breaching its 200-DMA and key resistance at Rs 119. The daily RSI has entered the bullish zone and weekly RSI is inching higher in the neutral region towards the bullish zone. The daily MACD is moving higher in line with the stock price and has entered the positive terrain implying upward momentum. Our short-term forecast on the stock is bullish. We expect its upward momentum to prolong and reach our price target of Rs 127 or Rs 131 in the ensuing trading sessions. Traders with short-term perspective can consider buying the stock with stop-loss at Rs 119.5.
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