Short-term traders with a contrarian view can consider buying the stock of Reliance Home Finance at current levels. The stock has been in a medium-term downtrend since its listing in late September at around ₹110. Short-term trend is also down for the stock. However, after registering a 52-week low at ₹62.5 on Wednesday, the stock started to recover. The stock is forming a key short-term support at around ₹63. Testing this support the stock moved higher and has gained 8.5 per cent on Thursday.

The stock appears to be on a reversal mode triggered by positive divergence in the daily relative strength index. The daily RSI is recovering from the oversold territory indicating possibility of a further recovery rally in the stock price. Other indicators in the daily chart are also featuring in the oversold zone, implying that a near-term up move is likely. Moreover, there has been an increase in daily volume over the past four trading sessions. Taking a contrarian stance, the near-term view is positive and the stock can extend its rally further in the ensuing trading sessions. As the downside appears limited, contrarian traders with a short-term perspective can buy the stock in dips with a stop-loss at ₹70. Short-term targets are ₹75 and ₹76.5.

(Note: The recommendations are based on technical analysis. There is a risk of loss in trading.)

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