We recommend a buy in the stock of Petronet LNG from a short-term perspective. It is evident from the charts of the stock that it was on a sideways consolidation phase in the broad band between Rs 150 and Rs 180, from July 2011 to April. The stock fell steeply in April this year, breaking through the lower boundary at Rs 150. However, the stock took support at its key long-term base level around Rs 126 and bounded up forming a hammer candlestick pattern on May 4. This pattern is a bullish reversal pattern. Moreover, the stock knocked the oversold levels in the daily Bollinger bands and has started to recover.

On Tuesday, the stock advanced four per cent accompanied by good volumes strengthening its bullish momentum. The daily as well as weekly relative strength index have recovered from the oversold territory, and are on the brink of entering conclusively into the neutral region from the bearish zone.

Other daily indicators are also recovering from the oversold terrain. We take a contrarian stance on the stock from a short-term perspective. We anticipate the stock to rally further and reach our price target of Rs 146 or Rs 151 in the ensuing trading sessions. Traders with short-term perspective can consider buying the stock with stop-loss at Rs 137.5.

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