Infrastructure Development Finance Company Limited
Suggestion: Buy, Stop loss at Rs. 90
Last Price 98.20
Figure 1 shows the movement of stock price of IDFC ltd. It also shows a trend line which the stock has started following recently (from last 3-4 sessions). The direction of the trend is upward, but nothing can be said about the life of this trend. So it also possible that it is a whipsaw. In order to figure out this, further tools are used as shown below.
This figure is again a snapshot of the stock price movement of IDFC ltd., along with 3 SMA lines that represent week, fortnight and monthly trend. The day count of the SMA lines being 5 (blue), 10 (brown) and 22 (pink). It is clear from these lines that the stock prices are expected to rise further up as the short term trend is moving above all other SMA lines. This is further confirmed with the help of other tools as shown below.
Bollinger band (as shown in figure 3) is one of the most common tool that gives some idea about the trend of the stock. As shown, the price is moving above the SMA(20) base line and thus the trend for now is considered to be bullish. Point to note is that the price has been moving above the base line from a long time (around 2 months) with intermittent bear effects.
For further analysis, the phase of the stock has to be determined, and the most simplest way to do so is by using ADX or Average Directional Index. The ADX shows a value of 43.39, therefore indicating that the stock is currently in the trending phase.
As the stock is currently in the trending phase, MACD histogram can be used to confirm the presence of Bulls. MACD histogram (as shown in fig. 5) displays that the bulls had been present from quite some time and they have started gaining strength from last 2-3 sessions. Keeping this trend running, they are expected to gain further strength in coming sessions.
Therefore, it is identified that the stock prices of IDFC ltd. are expected to rise further and thus the investors are advised to buy the stock with a stop loss at Rs. 90.