We recommend a buy in the stock of Hitachi Home and Life Solutions (India) from a short-term perspective. It is apparent from the charts of the stock that ever since peaking out from its life time high at Rs 402, registered in July 2010, it has been on a long-term downtrend. Medium-term trend is also down. But the stock found support at its long-term base level around Rs 95 last month and it began to stabilise by moving sideways above this base.
Triggered by positive divergence in daily relative strength index and weekly RSI reaching oversold territory, the stock reversed its direction upwards. The stock breached its 21-day moving average last week. Strengthening the short-term bullish momentum, the stock surged 5.4 per cent with unusual volume on Tuesday. Moreover, there is an increase in volume over the past seven trading sessions.
The daily RSI is on the brink of entering into the bullish zone and weekly RSI is recovering from the oversold terrain. The daily price rate of change indicator is featuring in the positive territory signalling buying interest. Taking a contrarian stance on the stock, we are bullish on it from a short-term horizon. We anticipate the stock's up move to sustain and touch our price target of Rs 114 or Rs 117 in the upcoming trading sessions. Traders with short-term perspective can consider buying the stock with stop-loss at Rs 107 levels.