We recommend a buy in Castrol India from a short-term perspective. The stock is in a medium-term uptrend since the December 15 trough at Rs 380. This uptrend paused in early February and the stock is moving sideways between Rs 450 and Rs 500 since then. This sideways move was in the form of an ascending triangle pattern that has bullish connotations.
The stock has moved above the upper ceiling of this short-term trading band on Monday. It is possible that the medium-term uptrend resumes from this point. Upper target according to this pattern is Rs 550.
Strong volume recorded on Monday, that was double the average volume recorded in the last four months is another positive. Relative strength index in the daily chart has moved well in to the bullish zone. The stock moved beyond the upper line of its Bollinger Band at 499. This indicator has begun expanding after a contraction indicating the possibility of an upward breakout.
Investors with a short-term view can buy the stock with stop at Rs 500. Short-term targets are Rs 515 and Rs 528.