ICICIdirect recommends buying in Oil and Natural Gas Corporation (ONGC) in the range of Rs 444-438 for target of Rs 510 with stop loss of Rs 409 on a closing basis for three months.

Commenting on the rationale, the stock broker said, ''The share price of ONGC emerged out of its five year consolidation as it steered past the yearly highs of 2010 during mid-May 2014. Since 2009 till recently, the stock was seen consolidating between the broad range of Rs 230 to Rs 370 levels. The breakout above the five year range signals the end of an elongated consolidation phase and triggers a key medium term trend reversal.

Over the last two weeks, the stock is seen taking a breather post the breakout rally which saw the stock hitting an all time high of 471. The current cool-off has helped short-term momentum oscillators to ease off from short term overbought conditions. The stock retraced its last up move (368-471) by 61.8% at Rs 406 levels and the bounce back in last couple of sessions indicates end of an intermediate correction and thus provides a fresh entry opportunity for medium-term players to ride the next up move.

Strong volumes accompanying the breakout rally validate the authenticity of the price breakout. The average weekly volumes during the four week rally since the middle of May 2014 (350 lakh shares) were more than double the 50 week average volume of 170 lakh shares. This clearly highlights strong participation in the direction of the trend.

We expect the stock to head towards the target of Rs 510 levels in the medium term. The measuring implication of the range breakout i.e. (370-230=140 points) added to the breakout level of 370 (370+140=510), which also coincides with the 100% extension of the previous up move from 368 to 471 as projected from the recent higher bottom of 406.

Among momentum oscillators, the weekly MACD, which gauges the strength in the underlying trend is seen diverging from its nine period average indicating strength in the price breakout and suggests continuance of upward momentum in the medium-term."

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