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We recommend a buy in the stock of IPCA Laboratories from a short-term perspective. It is evident from the charts of the stock that following a medium-term downtrend from the key resistance level of Rs 350, encountered in June, the stock found support at Rs 230 in October.
The range between Rs 230 and Rs 235 is a significant long-term support band that coincides with 38.2 per cent fibanocci retracement level of the stock's prior up move. Triggered by positive divergence in daily relative strength index and price rate of change indicator, the stock changed its direction, and since October low, it has been on a nascent uptrend.
On Wednesday, the stock jumped more than seven per cent accompanied by good volume. The stock breached its 21- and 50-day moving averages. The daily RSI is on the brink of entering into the bullish zone from the neutral region and weekly RSI is inching higher in the neutral region. Daily moving average convergence divergence indicator has signalled a buy and is gradually moving upwards inline with the stock price.
The daily as well as weekly price rate of change indicator is featuring in the positive territory implying buying interest. 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 278 or Rs 286 in the ensuing trading sessions. Traders with short-term perspective can buy the stock with stop-loss at Rs 262.
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