We recommend a buy in the stock of Indian Hotels Company from a short-term perspective. It is apparent from the charts of the stock that it has been on a medium-term uptrend after taking support at Rs 53 in early June 2012. The stock breached its moving average compression (21, 50, and 200-day moving averages) around Rs 61 in mid-September and hovers well above these averages. On Friday, the stock surged 6 per cent, breaking out of a significant resistance level at Rs 65. We observe that there is an increase in daily volume over the past six trading sessions.
The daily relative strength index is featuring in the bullish zone and weekly RSI has just entered this zone from the neutral region. The daily moving average convergence divergence indicator is moving higher in line with the stock price, in the positive territory implying upward momentum.
Both daily as well as weekly price rate of change indicators are featuring in the positive terrain, indicating buying interest. We are bullish on the stock from a short-term perspective. We expect its up move to continue and reach our price target of Rs 70 or Rs 71.5 in the ensuing trading sessions. Traders with short-term perspective can consider buying the stock with stop-loss at Rs 65.80 levels.