We recommend a buy in the stock of Jindal Steel & Power from a short-term perspective. It is evident from the charts of the stock that it has been on an intermediate-term downtrend from its January 2013 peak of Rs 472.
Nevertheless, the stock found base at its long-term support band between Rs 180 and Rs 200 in late June, July and early August this year. Triggered by positive divergence in the daily relative strength index and the moving average convergence divergence indicator, the stock changed direction recently.
Moreover, the weekly RSI is also displaying positive divergence backing the stock’s trend reversal. We notice that there is an increase in volume in the past three weeks. On Monday, the stock gained almost three per cent with good volume witnessing buying interest.
This up move has conclusively breached its 21-day moving average and reinforced short-term bullish momentum. The daily RSI is moving higher in the neutral region towards the bullish zone and the weekly RSI is recovering from the oversold area.
The daily MACD has signalled a buy and is on the brink of entering the positive from the negative territory. As the stock is turning around from a key long-term support with bullish momentum, we are optimistic on it from short-term perspective.
We expect its up move to continue and reach our price target of Rs 228 or Rs 233 in the approaching trading sessions. Traders with short-term perspective can buy the stock with stop-loss at Rs 214.5 level.
(Note: The recommendations are based on technical analysis. There is a risk of loss in trading.)