Today’s pick is PETRONET [stockquote]PETRONET[/stockquote]. The stock saw a double top in the starting of the year around Rs 175 levels, and slipped down to find support at Rs. 125 levels by June. It then started moving up and found resistance again around the same levels, and is currently withdrawing back. In the last three months, the stock has moved -1% vs. +5% of the Nifty’s.
Oscillator RSI and CMO are in no man’s land. The stock is trading at the top of Bollinger band giving a short-term bearish bias. Short-term technicals saw a 4×9 and 4×18 bullish cross-over accompanied with a Dragonfly bullish doji.
The MACD line has penetrated the signal line in a bullish manner a couple of days ago. However, Long-term and short-term GMMA lines can be seen inverted in a bearish manner given the downward movement of the stock.
PETRONET’s average correlation with the Nifty is +0.49 which is positive. The scrip will be replicating movement of Nifty. [stockquote]NIFTYBEES[/stockquote]
PETRONET has a historical volatility in the range of 0.3 to 0.9. The scrip’s volatility is currently in the lower end of the range.
Given these technicals, we suggest a short-term buy. For the long-term we suggest to take a call based upon the expansion of the long-term GMMA lines and stocks behavior around its resistance levels. However trailing stop-losses will be of help in case sudden trend-reversal were to take place.
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