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We recommend a buy in the stock of Indian Oil Corporation from a short-term perspective. It is seen from the charts of the stock that its long-term downtrend that started from its September 2010 peak of Rs 458, found support at its long-term base level at Rs 250 in December 2011.
Triggered by prolonged positive divergence in weekly and daily moving average convergence divergence indicators, the stock changed its trend. Since then, the stock has been on a medium-term uptrend. Following a minor correction, the stock took support around Rs 270 recently and continued its up move.
On Thursday, the stock climbed 2.4 per cent strengthening the up move. We notice that there is an increase in volume over the past three trading sessions, supporting the stock's current up move. The stock is hovering slightly above its 21- and 50-day moving averages. The daily relative strength index has entered into the bullish zone and weekly RSI is inching higher in the neutral region. Both daily as well as weekly price rate of change indicators are hovering in the positive zone implying buying interest.
We are bullish on the stock from a short-term perspective. We expect its up move to continue further and touch our price target of Rs 290 or Rs 300 in the upcoming trading sessions. Traders with short-term perspective can consider buying the stock with stop-loss at Rs 275.
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