Friday, January 8, 2016

Reliance Communications on a strong rally

The stock of Reliance Communications plunged below Rs.50 in August 2015 and revisited the level recorded in August 2012. After registering an all-time low at Rs.45.6, the stock changed direction.

Since then, the stock has been on a medium-term uptrend. It decisively breached the key resistance at around Rs.84 and moved out of a broad sideways consolidation range between Rs.55 and Rs.84 in late December.

Last week, the stock surged almost 5 per cent, extending its medium-term uptrend. The short-term trend is also up for the stock.

The indicators on the daily and weekly charts feature in the bullish zone, backing the stock’s progressing uptrend. Its medium-term uptrend is intact.

The stock trades well above its 50- and 200-day moving averages. Any decline in price can find support at Rs.84 or Rs.75 in the short term. You can consider averaging the stock on such declines with a stop-loss at Rs.70.

A conclusive breakthrough of the psychological resistance level of ₹100 can pave the way for an upmove to Rs.115 and then to Rs.135 or Rs.150 in the medium to long term.

Envisaging a move beyond Rs.150 is tough at this juncture. Therefore, consider exiting the stock in the band between Rs.135 and Rs.150 in the long run.

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