We recommend a buy in the stock of United Breweries Holdings from a short-term perspective. It is apparent from the charts of the stock that after registering a 52-week low at Rs 53 in early June, the stock bottomed out. This reversal was triggered by positive divergence in daily relative strength index and moving average convergence divergence indicator. Since then, the stock has been on a medium-term uptrend. Following a minor correction, the stock found support around Rs 75 on July 30. The stock's medium-term uptrend-line and its 200-day moving average provided base around Rs 75.

On Thursday, the stock skyrocketed almost 13 per cent breaching its immediate resistance at Rs 89. We observe that there is an increase in daily volumes in the past three trading sessions. The daily RSI has entered the bullish zone and weekly RSI is on the brink of entering this zone from the neutral region. Considering that the stock's medium-term uptrend-line is intact, we are positive on the stock from a short-term perspective. We expect its rally to prolong and reach our price target of Rs 96 or Rs 99 in the forthcoming trading sessions. Traders with short-term perspective can consider buying the stock with stop-loss at Rs 90.5.

(This article was published on August 2, 2012)
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