Stock Idea - Hindustan Oil Exploration

>> Wednesday, February 25, 2009

We recommend a buy in Hindustan Oil Exploration Company stock from a short-term trading perspective. It is apparent from the charts of the company that it was on an intermediate-term downtrend from its August 2008 peak of Rs 144 to its February 2009 low of Rs 50.

However, the stock found support around Rs 50, and bounced by almost 9 per cent on February 20. Accompanied with high volume, this up-move of the stock conclusively broke through the 21-day moving average as well as intermediate-term down trendline. The stock has a significant long-term support at Rs 50. The daily relative strength index (RSI) is rising in the neutral region towards the bullish zone and weekly RSI has recovered from the oversold territory.

The price rate of change indicator has entered the positive territory that indicates increase in buying pressure. Considering the recent break-through and the presence of significant support at Rs 50, we are bullish on the stock from a short-term horizon. We expect the stock to rally until it hits our price target of Rs 64 in the upcoming trading sessions. Traders with short-term perspective can buy the stock while maintaining a stop-loss at Rs 54. - Business Line