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We recommend a buy in the stock of Rural Electrification Corporation from a short-term horizon. It is seen from the charts of the stock that since registering its 52-week low at Rs 142 in early June 2012, the stock has been in an intermediate-term uptrend, forming higher peaks and troughs. In mid-December 2012, the stock took support at Rs 230 and continued its uptrend breaching key resistance at Rs 240. Short-term trend is also up from the stock. However, the stock is currently testing next important resistance at Rs 250.
On Tuesday, the stock advanced more than 2 per cent with above average volume, reinforcing its bullish momentum. It is hovering well above its 50- and 200-day moving averages. The daily relative strength index has re-entered this bullish zone from the neutral region and weekly RSI is featuring in the zone. The daily moving average convergence divergence indicator has signalled a buy and is hovering in the positive territory. Weekly MACD is moving higher in line with the stock price implying upward momentum.
Our short-term outlook is bullish on the stock. We anticipate it to break through the current resistance and reach our price target of Rs 261 or Rs 266 in the ensuing trading sessions. Traders with short-term horizon can consider buying the stock with stop-loss at Rs 245.70 levels.
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