Udaan - Buy IDFC:: Edelweiss

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IDFC is consolidating in a narrow range despite the positive news flow since it got banking license approval by Reserve Bank of India (RBI). The stock was moving in tandem with the index from September 2013 to July 2014 but has lost its groove recently. Since Q3 2014, we have witnessed the diversion in the rally but we expect it to coalesce in the bullish trend.

The price on the daily chart is trending in bullish territory, trading above its medium term and long term averages of 34 days and 200 days. The 200DMA was nearly tested in October 2014 when price hit the low of Rs. 134.15 and average was around Rs.131. IDFC bounced back above the 150 mark after this dash at the 200 day average. A bullish deep crab harmonic pattern completed at the Rs.134 levels (200DMA) which indicates the possibility of a strong reversal. The MACD (moving average convergence divergence) gave a positive crossover above the integer line supporting the reversal.

On the monthly chart, the price had given a fresh breakout of a trendline at Rs.148 and moved higher to Rs.158.40. This trendline is formed joining the high of 2010 of Rs.218.25 and 2013 of Rs.185.30. The price ended negative in the last four sessions re-testing the breakout of trendline. This re-test is an opportunity to enter long trades for target price of INR 185/190.

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https://www.edelweiss.in/research/Udaan--Buy-IDFC/10005221.html