We recommend a buy in the stock of Adani Enterprises from a short-term perspective. It is seen from the charts of the stock that following an intermediate-term downtrend from its December 2012 peak of Rs 296, the stock found long-term support at around Rs 153 in early August.
On Thursday, the stock jumped 5 per cent with good volume forming a bullish engulfing pattern. This reversal was triggered by positive divergence in daily relative strength index and price rate of change indicator.
The daily RSI has entered the neutral region from the bearish zone and weekly RSI is likely to enter the neutral region from the bearish zone.
The daily price rate of change indicator has entered the positive terrain from the negative implying buying interest.
We take a contrarian stance on the stock from a short-term perspective, as we notice formation of bullish engulfing candlestick pattern and the stock reversing higher from a significant long-term support backed by positive divergence.
We expect its rally to extend and reach our price target of Rs 172 or Rs 176 in the approaching trading sessions. Traders with short-term horizon can buy the stock with stop-loss at Rs 162 level.
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