Technical Analysis

Trading pick of the week: Buy LIC Housing Finance

Yoganand D | Updated on June 14, 2020


(₹280.8): Buy

The stock of LIC Housing Finance gained 3.3 per cent on Friday, decisively surpassing a key immediate resistance at around ₹260. This rally has strengthened the short- as well as the medium-tem uptrend of the stock.

Investors with a medium-term horizon can buy the stock at current levels.

In late March, the stock marked a new 52-week low at ₹186 and reversed direction. Since then, it has been in a medium-term uptrend. After taking support at ₹219 in mid-May, the stock continued to trend upwards, and has been in a short-term uptrend since then. While trending up, the stock breached its 21-and 50-day moving averages in the past week and trades well above these levels.

There has been an increase in daily volume over the past four weeks. The relative strength index (RSI) has entered the bullish zone from the neutral region and the weekly RSI has entered the neutral region from the bearish zone. Besides, the daily as well as the weekly price rate of change indicator feature is in the positive terrain, implying buying interest.

The medium-term outlook appears to be bullish for the stock. It has a key resistance at ₹300.

An emphatic break above this barrier will reinforce the bullish momentum and take the stock higher to ₹320 and ₹335 levels over the medium term, with a minor pause at ₹320.

Investors with a medium-term time-frame can buy the stock with a stop-loss at ₹250 levels.

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Published on June 14, 2020
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