Dewan Housing Finance Corporation (₹647.9)

The outlook for the stock of Dewan Housing Finance Corporation (DHFL) is bullish. The stock surged over 6 per cent on Monday decisively breaking above a key resistance level of ₹610 with strong volume. This confirms a cup and handle pattern on the daily chart. It also indicates the resumption of the overall uptrend that has been in place since November last year.

The level of ₹610 will now serve as a good support and limit the downside in the short-term as dips to this support may find fresh buyers. The upmove is likely to extend and target ₹700 in the coming days. Short-term traders with high risk appetite can go long at current levels. Accumulate longs on dips at ₹620 and ₹610. Keep the stop-loss at ₹605 for the target of ₹700. Revise the stop-loss higher to ₹655 as soon as the stock moves up to ₹670.

The bullish outlook will get negated only if the stock breaks below ₹610. Such a break will increase the likelihood of the stock falling to ₹570 levels thereafter. But such a strong fall looks unlikely at the moment.

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

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