Aditya Birla Chemicals

We recommend a buy in the stock of Aditya Birla Chemicals (India) from a short-term perspective. After encountering resistance at the long-term resistance around Rs 103 (early 2008 peak) in January 2010, the stock started to decline. However, the stock found support at its significant intermediate-term support level at Rs 70 in late March and bounced upwards. A positive divergence displayed in the daily moving average convergence and divergence triggered the stock's up-move. It has now decisively penetrated its 50- and 200-day moving average around Rs 70. The advance days are backed with above average volume implying strength in the rally. The stock appears to have resumed its longer-term uptrend that has been in place since November 2009 low of Rs 27.

The daily relative strength index is featuring in the bullish zone and weekly RSI is on the brink of entering in to this zone. The daily moving average convergence is about to enter the positive territory while the weekly MACD is already featuring in this territory. Our short-term forecast on the stock is positive. We expect it to trend upwards to our price target of Rs 90 and Rs 93 subsequently. Short-term traders can buy the stock with stop-loss at Rs 80.5.

via BL