We recommend a buy in the stock of Rashtriya Chemicals & Fertilizers (RCF) from a short-term horizon. It is seen from the charts of stock that following a steep decline in November and December 2011, the stock found support at Rs 42 on December 20. But the stock changed its trend subsequently and began to move higher.
In early this January, the stock accelerated accompanied by extraordinary volume. The stock took support at around Rs 61, following a corrective decline that retraced 38.2 per cent Fibonacci retracement level. It is trading well above both 21- and 50-day moving averages. The 21-DMA crossing over 50-DMA signals good medium-term prospects. Reinforcing the bullish momentum, the stock advanced almost 4 per cent with above average volume on Monday.
The daily relative strength index has re-entered in to the bullish zone from the neutral region and weekly RSI is inching higher in the neutral region. The daily moving average convergence divergence indicator has signalled a buy and is featuring in the positive territory. We are bullish on the stock from a short-term perspective. We anticipate the stock's rally to continue and reach our price target of Rs 68 or Rs 70 in the ensuing trading sessions. Traders with short-term perspective can consider buying the stock with stop-loss at Rs 64.