The stock jumped up almost 8 per cent with above average volumes on Friday, pushing its weekly gains to 10.4 per cent. Following a corrective decline from its all-time high of Rs 3,279, registered in early April 2012, the stock found support at Rs 2,270 during early June. Triggered by positive divergence in the daily relative strength index, the stock reversed direction and began to move higher. Since then it has been on a short-term uptrend. This upward journey appears to have resumed its long-term uptrend that has been in place from 2008 low of Rs 330. Intermediate-term trend is also up since September 2011 low of Rs 1,570. Both the daily and the weekly RSI are featuring in the bullish zone.

The stock can continue its upward momentum and test resistance at Rs 3,000 in the short-term and Rs 3,300 in the medium-term. Strong breakthrough of Rs 3,300 can push the stock higher to Rs 3,500. Conversely, inability to rally above Rs 3,300 can pull the stock down to Rs 2,700 or to Rs 2,400 in the same period. Next important support is at Rs 2,100.

HPCL (Rs 334.3)

Hindustan Petroleum which skyrocketed 11.5 per cent in the previous week, emphatically broke out of a significant resistance at Rs 315, the level which it was unable to breach since mid-February 2012. Further, the stock has decisively breached its moving average compression (21, 50 and 200-day moving averages). With this rally, the stock has resumed its medium-term uptrend that has been in place since this January low of Rs 238. Subsequent resistance for the stock is at Rs 350. Strong rally above this level will pave way for a rise to Rs 376 and to Rs 400 in the medium-term.

However, failure to surpass Rs 350 will pull the stock down to Rs 315 in the short-term. Next significant support is in the band between Rs 290 and Rs 300. Only an emphatic fall below Rs 275 will mar the stock’s medium-term uptrend and pull it lower to Rs 250.

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