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We recommend a buy in Allied Digital Services from a short-term horizon. It is apparent from the charts of the stock that it has been consolidating sideways in a broad range between Rs 700 and Rs 920 since late January. The support at Rs 700 is cushioning the declines while it is unable to get past the resistance at Rs 920.The stock failed to surpass this level in May and again in July. In late August, the counter took support at around Rs 700 and commenced a short-term up move. This reversal was supported by a positive divergence in the daily relative strength index (RSI). The RSI has entered in to the neutral region from the bearish zone and the weekly RSI has reversed taking support at the 40 levels. The stock has crossed over its 21-day moving average recently. The moving average convergence and divergence is also indicating a buy. We are bullish on the stock from a short-term perspective. We anticipate the stock’s short-term up move to prolong further until it hits our price target of Rs 830 in the forthcoming trading sessions. Traders with short-term perspective can buy the stock while maintaining a stop-loss at Rs 714.

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