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We recommend a buy in the stock of Rallis India from a short-term perspective. It is apparent from the charts of the stock that from its early December 2012 peak of Rs 168, the stock has been in a medium-term downtrend. Nevertheless, the stock's significant long-term support at around Rs 112 provided the base for the stock in early March and again in the previous week. Triggered by positive divergence in the daily moving average convergence divergence indicator and weekly relative strength index, the stock changed direction. On Friday, the stock gained 5 per cent with above average volume. The daily RSI is moving higher in the neutral region and the weekly RSI is on the brink of entering the neutral region from the bearish zone. Moreover, the daily MACD has signalled a buy and is moving higher in line with the stock price. Taking a contrarian view on the stock we are bullish on it from a short-term perspective. We anticipate the stock’s up move to continue and reach our price target of Rs 126 or Rs 129 in the ensuing trading sessions. Traders with short-term perspective can consider buying the stock with stop-loss at Rs 118.7 level.
(Note: The recommendations are based on technical analysis. There is a risk of loss in trading.)
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