Neyveli Lignite

We recommend a buy in the stock of Neyveli Lignite Corporation from a short-term perspective. After recording a 52-week high at Rs 177 on January 19, the stock was on a medium-term downtrend until it found support around Rs 140 in late May. The level Rs 140 is a significant long-term support for the stock. Subsequently, the stock bounced up and has been on a short-term uptrend. Moreover, the stock appears to have resumed its long-term uptrend that has been in place since its October 2008 low of Rs 44.5. The stock decisively breached through its moving average compression around Rs 147 in early June. It is trading well above its 21 and 50-day moving averages. The stock's 2.5 per cent jump with above average volume on July 1 has reinforced the short-term bullish momentum. The daily relative strength index is featuring in the bullish zone and weekly RSI is heading towards this zone in the neutral region. The weekly price rate of change indicator has entered the positive territory implying that buying interest has resumed. Our short-term outlook on the stock is positive. We expect it to move up until it hits our price target of Rs 166 or Rs 170 in the approaching sessions. Short-term traders can buy the stock with stop-loss at Rs 154.

via BL