Tuesday, April 28, 2009


Life above 200-DMA....

IDFC is doing a balancing act around the 200-DMA. Technically, the 200-DMA is a critical level above which the bulls take charge and below which, bears look to take advantage. Reamrkably, the stock is testing its 200-DMA after May 2008.

On the daily chart (as shown in this report), the stock has been trading in a rising channel from a low of Rs44 in early March 2009, thus indicating strong build up in the stock. In fact, a detailed study of the daily chart suggests that stock has given a breakout past its 6-month resistance line with heavy volumes. In the same period, the stock made three attempts to break the resistance but failed. On Tuesday, it finally broke the crucial level with highest volumes in April 2009. Even if it declines from the current level, the short-term moving averages should act as a strong support for the stock.

IDFC was listed on the bourses in August 2005 at Rs 60, 76% premium to its issue price. Thereafter, it fell to a low of Rs44 in July 2006. Between July 2006 and January 2008, the stock saw a rally up to the levels of Rs229. A worldwide fall out in global financial markets brought IDFC back to the levels of Rs45 in October 2008. Since then, the stock has bounced back at several occassions from the critical support levels.

We believe the stock has formed a nottom at Rs44-45 levels. Rebound from here is in progress and further upside cannot be ruled out. Technical charts are appearing interesting from a long term view. The longer term target for the stock is above Rs 100, and corrections should be used as entry points. The near-term support is at Rs 56. We recommend traders to buy the stock in the range of Rs70-78 for a target of Rs 100 and Rs 105.

To see full report: IDFC