We recommend a buy in the stock of Infrastructure Development Finance Company (IDFC) from a short-term perspective. It is seen from the charts of the stock that following a medium-term decline from its February peak of Rs 146, it found support around Rs 110 in early May. Triggered by positive divergence displayed in daily relative strength index, the stock reversed direction. Since early May, the stock has been on a short-term uptrend. Last week, the stock took support around Rs 120 and continued its up move.
The stock jumped 4.6 per cent penetrating its medium-term downtrendline as well as its 50-day moving average on Wednesday. It is hovering well above its 200- and 50-day moving averages. We notice that there is an increase in volumes over the past three trading sessions. The daily RSI is on the brink of entering the bullish zone and weekly RSI is inching higher in the neutral region towards the bullish zone. The daily moving average convergence divergence indicator has signalled a buy and is moving in line with the stock price since early May. We are optimistic on the stock from a short-term perspective. We expect its rally to prolong and reach our price target of Rs 132.5 or Rs 136.5 in the ensuing trading sessions. Traders with short-term perspective can consider buying the stock with stop-loss at Rs 125.