Today's Pick - IDFC

We recommend a ‘sell’ in Infrastructure Development Finance Company (IDFC) from a short-term perspective. It is evident from the charts of IDFC that the stock has been on an intermediate-term downtrend from its January 2008 peak of Rs 235, forming lower peaks and lower troughs.

In May, the stock declined below the 200 and 50-day moving averages. The downtrend has continued and the stock conclusively breached the key support level Rs 110 recently. On July 29, the stock tumbled almost 9 per cent, reinforcing the downtrend. With this, the daily relative strength index (RSI) has entered the bearish zone from the neutral region and the weekly RSI is featuring in this zone. The moving average convergence and divergence is featuring in the negative territory. The stock is trading well below its 21 and 50-day moving averages.

Considering that the medium-term down trendline is intact, we are bearish on the stock in the short-term. We expect the stock’s decline to continue until it hits our price target of Rs 78 in the forthcoming trading sessions. Traders with short-term perspective can sell the stock while maintaining a stop-loss at Rs 94.

via BL