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We recommend a buy in the stock of Petronet LNG from a short-term horizon. It is seen from the charts of the stock that since taking support at Rs 78 in June 2010, the stock has been on a long-term uptrend. Within this uptrend, the stock has been on a sideways consolidation phase in a broad range between Rs 150 and Rs 180 from July 2011. Its key support at around Rs 160 cushioned the stock from further declines.
The stock's 200-day moving average was also providing support from February this year. Taking adequate support around Rs 160, the stock accelerated two per cent breaching both of its 21- and 50-day moving averages on Thursday. We notice that there is an increase in volumes over the past two trading sessions. The stock's long-term uptrend is still in place . The daily moving average convergence divergence indicator has signalled a buy and is likely to re-enter the positive territory.
Our short-term outlook on the stock is bullish. We expect its up move to prolong and reach our price target of Rs 172 or Rs 177 in the ensuing trading sessions. Traders with short-term perspective can consider buying the stock with stop-loss at Rs 162.
The daily relative strength index is on the brink of entering in to the bullish zone from the neutral region and weekly RSI is inching higher in the neutral region toward the bullish zone.Both the daily and weekly price rate of change indicators are hovering in the positive area implying buying interest.
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