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We recommend a buy in the stock of Simplex Infrastructures from a short-term perspective. It is seen from the charts of the stock that after prolonged testing of its significant resistance levels at Rs 500, the stock started to decline in late October 2010. It was on a medium-term downtrend until early March, when it found support at its long-term base zone between Rs 300 and Rs 315. However, the stock changed direction last week after taking considerable support by trading around its long-term base zone. Moreover, positive divergence displayed in the weekly relative strength index and daily moving average convergence divergence backed its reversal.
On Monday, the stock jumped almost seven per cent, penetrating its medium-term downtrend line as well as 21-day moving average. Daily RSI is on the verge of entering into the bullish zone from the neutral region and weekly RSI is about to enter the neutral region from the bearish zone. The daily price rate of change indicator is featuring in the positive territory implying buying interest. We are bullish on the stock from a short-term perspective. We expect it to rally until it reaches our price target of Rs 356 or Rs 366 in the approaching trading sessions. Traders with short-tem horizon can consider buying the stock with stop-loss at Rs 337.
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