Tata Communications

We recommend a buy in the stock of Tata Communications from a short-term perspective. It is apparent from the charts that the stock has been on a medium-term downtrend from its May high of Rs 651 (a 52-week high). In late October, the stock broke through the significant support level at Rs 450 by experiencing high selling interest. Subsequently, the stock tumbled sharply and found support at around Rs 350 in early November, a long-term support. Since then the stock had been on sideways movement just above this support. On November 27, the stock gained almost 6 per cent accompanied with high volume, crossing over the 2-day moving average. With this gain the stock has formed a bullish engulfing candlestick pattern signalling short-term strength. The daily relative strength index (RSI) had entered the neutral region from the bearish zone and weekly RSI is recovering from the oversold territory. The daily moving average convergence and divergence indicator has signalled a buy. We are bullish on the stock from a short-term perspective. We anticipate it to move up until it hits our price target of Rs 420. Trader with a short-term horizon can buy the stock while maintaining a stop-loss at Rs 364.
via BL