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The stock of Hindustan Oil Exploration Company surged 6.8 per cent with an above average volume on Thursday. After recording a 52-week high of ₹89.3 in early April 2017, the stock was on a corrective decline until it found support at ₹68 in early June. Since then, it has been in a medium-term sideways consolidation phase in the band between ₹68 and ₹78.
After testing the lower boundary earlier on Monday, the stock has gained 13 per cent so far this week. It has formed a bullish engulfing candlestick pattern in the weekly chart indicating a short-term trend reversal. Moreover, the stock has emphatically breached its 50- and 200-DMAs. Both the daily and weekly relative strength indices are moving towards the bullish zone in the neutral region. The buying interest is evident as the daily and weekly price rate of change indicators feature in the positive territory.
With the current optimism in the stock, it has potential to break the upper boundary and trend upwards in the short term. Targets are ₹81 and ₹83. Traders with a short-term view can buy the stock with a stop-loss at ₹75.5.
(Note: The recommendations are based on technical analysis. There is a risk of loss in trading.)
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