After a decisive upside breakout of crucial overhead resistance, like a down sloping trend line at Rs 48 in the later part of November, the stock price has moved up sharply in the next few weeks.
The downward correction of last week has placed the stock price at the support of previous upside breakout area and has resulted into a sustainable upside bounce on Monday.
This pattern indicates a validation of the upside breakout of important resistance and this suggests more upside for the near term. Weekly 14 period RSI shows positive indication.
Buying can be initiated in HUDCO at CMP (Rs 50.25), add more on dips down to Rs 48, wait for the upside targets of Rs 55 and Rs 61 in the next 3-5 weeks. Place a stop loss of Rs 46.
(Nagaraj Shetti, Technical Research Analyst, HDFC Securities)