Investors with a short-term perspective can consider buying the stock of Jyothy Laboratories. It is apparent from the charts of the stock that it bottomed out in November 2011 at Rs 125, triggered by positive divergence in weekly relative strength index. Since then, the stock has been on an intermediate-term uptrend. However, following a corrective decline that retraced 61.8 per cent fibonacci retracement level of the stock's previous up leg, it took support at Rs 156 in late March this year. Subsequently, the stock resumed its uptrend and has been on a short-term uptrend.
On Wednesday , the stock jumped 6.8 per cent, emphatically penetrating its immediate resistance at Rs 172. There is an increase in daily volumes over the last two trading sessions. The stock has crossed over its 50- and 200-day moving averages and is hovering well above them. The daily RSI is featuring in the bullish zone and weekly RSI is on the brink of entering in to the bullish zone from the neutral region.
We are bullish on the stock from a short-term perspective. We expect its up move to continue and reach our price target of Rs 191.5 or Rs 197 in the days ahead. Traders with a short-term horizon can consider buying the stock with stop-loss at Rs 180.