We recommend a buy in the stock of Nava Bharat Ventures from a short-term perspective. It is evident from the charts of the stock that after encountering significant long-term resistance at Rs 440 in June 2010, the stock changed direction and has been on an intermediate-term downtrend.
In late October the stock resumed its downtrend meeting resistance around Rs 390 and accelerated down sharply. However, long-term support zone between Rs 290 and Rs 300 arrested this sharp decline in late November. Thereafter the stock consolidated around this support and formed a falling wedge pattern which is considered as bottom reversal pattern in this scenario.
Triggered by positive divergence displayed in the daily as well as weekly relative strength index and daily moving average convergence divergence oscillator, the stock reversed direction recently. On December 22, the stock jumped 6 per cent with above average volume conclusively breaking out of falling wedge pattern and short-term downtrend-line. We are positive on the stock from a short-term horizon.
We expect it to move higher until it touches our price target of Rs 340 or Rs 355. Traders with short-term perspective can consider buying the stock with stop-loss at Rs 323.