The share price of Petronet LNG is currently placed at a major value area around 203-205 levels. The corrective decline of the last two months has the underpinning characteristics of a secondary correction within the larger uptrend.
We believe the stock is likely to form a base around the major of 200-203 and resume its uptrend, thus providing a good entry opportunity for short to medium term with a favourable risk reward set-up.
The corrective decline from the 52 weeks high of 229.50 in the last two-three months has helped the stock price to work out of overbought conditions and discover a value area around 200-205 being the confluence of the of the previous major rally from 171 (December 2016) to 229.50 (May 2017) and upward sloping lower channel band joining from 171.32 to 175.80 containing entire seven-eight months up move.
Moreover, stock witnessed sharp surge in volumes near important forming a “Bullish Piercing Line” chart pattern, which is said to be reversal pattern, usually formed near supports (shown in blue circular object).
Also it has been observed that the stock respecting its longer term 200-EMA line placed at 197 levels, thus providing an important support for the stock going forward.
14-period daily has crossed above 30 levels and heading higher, slow has given a buy signal.
We expect the stock to resume its uptrend after base formation around the above mentioned and head towards Rs 225 in the coming weeks, Hence suggest a Buy as per levels mentioned above.