Today's Pick - NTPC

We recommend a buy in National Thermal Power Corporation (NTPC) from a short-term perspective. From the charts of NTPC, we note that it had been on a medium-term downtrend from its early May 2008 peak of Rs 203 to its late June trough of Rs 148. However, the stock found support at around Rs 150 (significant long-term support level) and has been on a short-term uptrend since early July.

On July 9, the stock conclusively penetrated the medium-term down trendline and its 21-day moving average by gaining 4 per cent. The stock decisively breached the 50-day moving average by jumping up by 5 per cent, accompanied with good volume on July 18.

The daily relative strength index (RSI) has entered in to the bullish zone and the weekly RSI is rising in the neutral region. The daily moving average convergence and divergence (MACD) is on the verge of entering in to the positive territory. Our short-term forecast for the stock is bullish.

We anticipate the stock’s current up move to continue until it hits our price target of Rs 195 in the approaching trading sessions. Traders with short-term perspective can buy the stock while maintaining stop-loss at Rs 164.

via BL