3i Infotech (Rs 50.1): Buy

We recommend a buy in the stock of 3i Infotech. It is seen from the charts that they stock found support at its long-term base in the band between Rs 38 and Rs 40 in February 2011. After re-testing this significant support in mid-March, it bottomed. A medimum-term uptrend then started, triggered by positive divergence in the weekly relative strength index. On April 25, the stock decisively broke through its medium-term downtrend-line that was in place since November 2010. Further, reinforcing the uptrend, the stock penetrated its immediate resistance positioned at Rs 48 by jumping 6 per cent on Thursday. We notice that there has been an increase in volumes over the past six trading sessions. Daily moving average convergence divergence indicator has signalled a buy and is hovering in the positive territory implying upward momentum. We are bullish on 3i Infotech from a short-term horizon. We anticipate its up-move to continue until it reaches our price target of Rs 52 or Rs 53.5. Traders with short-term perspective can buy the stock with stop-loss at Rs 48.5.