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We recommend a buy in the stock of Infrastructure Development Finance Company (IDFC) from a short-term perspective. It is seen from the charts of the stock that from its November 2010 peak of Rs 218, it has been on an intermediate-term downtrend.
The stock which was on a short-term downtrend from its late July peak of Rs 144, found support at its long-term base level of Rs 105 in late August, and changed direction. This was triggered by positive divergence in daily relative strength index and daily moving average convergence divergence indicators. After hovering above its long-term support for more than a month, the stock started to rally.
On Monday, the stock jumped almost five per cent breaking through its immediate resistance at Rs 118 accompanied by above average volumes. The stock is trading well above its 21- and 50-day moving averages. Daily RSI has entered into the bullish zone from the neutral region and weekly RSI is featuring in the neutral region.
The daily MACD is on the brink of entering into the positive territory implying bullish momentum. We are bullish on the stock from a short-term perspective. We anticipate its up move to continue and reach our price target of Rs 125.5 or Rs 129.5 in the ensuing trading sessions. Traders with short-term perspective can buy the stock with stop-loss at Rs 118.
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