We recommend a buy on the stock of Petron Engineering Construction from a short-term perspective with a stop-loss level at Rs 87.5. It is apparent from the charts that the stock has been on a medium-term downtrend from October 2012 peak of Rs 177.

However, the stock found support in the band between Rs 65 and Rs 70 in late March. The stock subsequently, changed direction triggered by positive divergence in daily and weekly indicators. It is in a near-term uptrend. On Monday, the stock jumped 7 per cent with above average volumes, breaching its immediate resistance as well as 50-day moving average.

The stock is hovering well above its 21- and 50-day moving averages. The daily relative strength index has entered the bullish zone from the neutral region and weekly RSI in on the brink of entering the neutral region from the bearish zone.

The daily moving average convergence divergence indicator is moving higher in line with the stock price and is on the verge of entering the positive area. Taking a contrarian stance on the stock from a short-term perspective, we are bullish on it. We expect its rally to continue and reach our price target of Rs 93 or Rs 95.

( Note: The recommendations are based on technical analysis. There is a risk of loss in trading.)

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