Today’s pick is IDFC [stockquote]IDFC[/stockquote]. The stock began 2012 with an uptrend which ended around mid-March after testing resistance around Rs. 150. This was then followed by a correction to Rs. 120 in June with a double-bottom formation. The stock has since risen to its 52-week high of Rs. 180 and has been trying to break free of that level since December. In the last three months, the stock has moved +9% vs. +5% of the Nifty’s.
Oscillators RSI and CMO are in no-man’s land. Also, the short-term technical flashed a 4×9 and a 4×18 Bullish cross-over for the scrip yesterday.
The MACD line and the signal line have been moving close to each other, with the stable histogram levels, indicating no particular bias. However, long-term GMMA lines are experiencing expansion which suggests an upward movement for the stock.
IDFC’s average correlation with the Nifty is 0.72 is positive and quite strong. The scrip will be replicating the movement of Nifty closely. [stockquote]NIFTYBEES[/stockquote]
IDFC has a historical volatility in the range of 0.4 to 0.8. The scrip’s volatility currently is in the lowest part of the range.
To conclude given these technicals, we suggest a short-term and long-term BUY. Although, the long-term trend could lose strength on account of divergences that are visible in technicals. Trade this with a trailing-stop-loss in place so that you can book profits when the reversal takes place.
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