We recommend a buy in the stock of Power Finance Corporation from a short-term perspective. It is evident from the charts of the stock that it has a significant long-term support in the band between Rs 133 and Rs 140. After taking support in this band, the stock started to trend northwards in May. This trend-reversal was also triggered by positive divergence in daily relative strength index and price rate of change indicator. Since then, the stock has been trending higher forming higher peaks and troughs. Late November, the stock took support at around Rs 175 and continued its up-move.
On Thursday , the stock surged 3.7 per cent accompanied by above average volumes, decisively breaching its immediate resistance at Rs 195 levels. The stock is hovering well above its 50- and 200-day moving averages. The daily relative strength index is featuring in the bullish zone and weekly RSI is on the brink of entering this zone from the neutral region. The daily moving average convergence divergence indicator has signalled a buy and is likely to enter the positive territory. The weekly MACD is moving higher in line with the stock price signalling upward momentum. Both daily and weekly price rate of change indicators are featuring in the positive terrain implying buying interest.
We are optimistic on the stock from a short-term perspective. We expect its rally to continue and reach our price target of Rs 209.5 or Rs 213.5 in the forthcoming trading sessions. Trades with a short-term perspective can consider buying the stock with stop-loss at Rs 197 levels.
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