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We recommend a buy in the stock of Jubilant Life Sciences from a short-term perspective. It is evident from the charts of the stock that from its July 2010 peak of Rs 394, it has been on an intermediate-term downtrend. The stock's downtrend accelerated in first quarter of this year. However, the stock found support at its long-term base level of Rs 150 on March 28 and changed direction triggered by positive divergence in daily and weekly indicators.
Taking support at Rs 160, the stock started to move higher last week. On Monday, Jubilant Life Sciences jumped 6.7 per cent with above average volume, conclusively breaking through its immediate resistance at Rs 170 as well as its 50-day moving average. The stock is hovering well above its 21- and 50-day moving averages. The daily relative strength index has entered into the bullish zone from the neutral region. Weekly RSI has entered in the neutral region from the bearish zone signalling upward momentum.
The stock's daily moving average convergence divergence indicator is on the brink of entering the positive territory from the negative one. Short-term outlook is bullish for the stock. We expect it to move higher until it reaches our price target of Rs 182 or Rs 189 in the ensuing trading sessions. Traders with short-term perspective can buy the stock with stop-loss at Rs 172.5.
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