We recommend a buy in the stock of Jaiprakash Associates from a short-term perspective. It is evident from the charts of the stock that from its October 2009 peak of Rs 180, the stock has been on a long-term downtrend. Medium-term trend is also down since this April peak of Rs 102.

However, the stock's long-term support band between Rs 55 and Rs 60 arrested the stock's decline two week before, and is cushioning the stock. Further, triggered by a positive divergence in the daily relative strength index and daily price rate of change indicators, the stock changed its direction. It surged five per cent on Monday, reinforcing the bullish momentum.

There is an increase in volumes in the last two trading sessions. Daily RSI has entered into the neutral region from the bearish zone and weekly RSI is recovering from the oversold territory. The daily moving average convergence divergence indicator has signalled a buy.

Taking a contrarian stance on the stock, we are bullish on it from a short-term perspective. We expect its up-move to continue and reach our price target of Rs 64.5 or Rs 66.5 in the approaching trading sessions. Traders with short-term perspective can buy the stock with stop-loss at Rs 61.

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