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We recommend a buy in the stock of Sesa Goa from a short-term perspective. It is evident from the charts of the stock that it has been on a medium-term downtrend since reversing down from the key resistance at Rs 205 in January. Short-term trend is also down for the stock. However, last week, it found support at around Rs 119 and started to form a strong base in the band between Rs 119 and Rs 125. Triggered by positive divergence in daily relative strength index and daily price rate of change indicator, the stock reversed direction.
On Monday, it gained 4.7 per cent strengthening near-term bullish momentum. We notice that there is an increase in daily volume over the past seven trading sessions. The daily relative strength index is on the brink of entering the neutral region from the bearish zone and weekly RSI is recovering from the oversold territory. Taking a contrarian stance on the stock from a short-term perspective, we are optimistic on it. We expect its rally to continue and reach our price target of Rs 134.5 or Rs 137.5 in the approaching trading sessions. Traders with short-term perspective can consider buying the stock with stop-loss at Rs 127 level.
( Note: The recommendations are based on technical analysis. There is a risk of loss in trading.)
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