Consolidated Construction Consortium

We recommend a buy on Consolidated Construction Consortium (CCCL) stock from a short term trading perspective. It is clearly apparent from the charts of CCCL that it was on an intermediate-term downtrend from August 2008 high of Rs 634 to an all-time low of Rs 105 recorded on April 9. However, the stock recently found support in the range of Rs 105-110 and bounced off changing its direction.

A prolonged positive divergence in the daily moving average convergence and divergence indicator supports this trend reversal. The stock jumped up 18 per cent, penetrating the intermediate-term down trendline as well as 21-day moving average on April 13. Moreover, the stock has closed above its 50-day moving average.

We notice that there is an increase in volume over the past three trading sessions. The daily relative strength index (RSI) is on the brink of entering in to the bullish zone and the weekly RSI is recovering from the oversold territory. Our short-term forecast on the stock is bullish. We anticipate it to move up until it hits our price target of Rs 140.

Traders with short-term perspective can buy the stock while maintaining a stop-loss at Rs 121.