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We recommend a buy in the stock of IRB Infrastructure Developers from a short-term perspective. It is seen from the charts of the stock that it has been on an intermediate-term downtrend since its August 2010 peak of Rs 312. Encountering resistance at Rs 230 in early April, the stock resumed its downtrend and was on a medium-term downtrend until it found support in the range between Rs 145 and Rs 150 in May. The stock had previously taken support from this long-term base level in early February and bounced up, making this level more significant.
Triggered by positive divergence in daily relative strength index as well as moving average convergence divergence and also presence of key support band, the stock changed its direction in late May. Reinforcing the bullish momentum, the stock penetrated its immediate resistance at Rs 170 by jumping almost five per cent on Monday. There is an increase in volumes over the past five trading sessions. Daily RSI has entered into the bullish zone and weekly RSI is featuring in the neutral region.
Our short-term forecast on the stock is bullish. We anticipate its move to prolong until it reaches our price target of Rs 181 or Rs 186.5 in the days ahead. Traders can buy the stock with stop-loss at Rs 170.5 levels.
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