Investors with medium-term perspective can consider buying the stock of MOIL Ltd (Rs 364.9), that provides mining operations and services. The stock’s downtrend that started from its listing day on December 15 was arrested after forming a trough at around Rs 320 in late June 2011.
However, the stock changed its direction triggered by prolonged divergence in weekly relative strength index. Since then the stock has been on a nascent short-term uptrend, backed with good volumes during advance sessions. On July 5, the stock jumped 5 with heavy volumes, conclusively breaching its 21-day moving average.
Reinforcing the bullish momentum, the stock surged 4 per cent penetrating its intermediate-term downtrend line on July 15. This up move has also breached its 50-day moving average. The 14-day relative strength index has entered in the bullish zone from the neutral region and its weekly RSI has entered in the neutral region from the bearish zone for the first time indicating upward momentum.
Daily moving average convergence divergence has signalled a buy and is on the brink of entering in to the positive territory. Price rate of change indicator is hovering in the positive terrain denoting buying interest.
We are bullish on MOIL from a medium-term horizon. We believe that the stock has the potential to trend northwards and reach our medium-term price target of Rs 420. However, we don’t rule out a minor pause or sideways move at around Rs 395 during the up move. Investors with medium-term prospective can consider accumulating the stock in minor declines with stop-loss at Rs 337 levels.*To get the password for buy calls, please subscribe to this blog. You will receive the password in next email to you*