Bharat Forge also surged higher in the broad-based rally witnessed on Monday. This provides an ideal opportunity for short-term traders to make a quick buck.
The stock has had a stellar run in the last three months. The strong downtrend since 2010 got halted in August 2013 and the stock has risen about 61 per cent since then.
In fact, the recent rally from the August low of Rs 188.5, has decisively breached the downtrend that was in place since 2010.
Also the pull-back seen last week received support from the 21-day moving average, currently at Rs 290 and the stock has risen 6 per cent in the last three trading days.
This 21-day moving average support has limited the downside whenever the stock price declined. The trend is expected to remain up as long as the stock trades above this support.
Entering a long position with a stop-loss at Rs 298 is recommended for a target of Rs 315. The stock is looking strong from a medium-term view as well.
Investors with a medium-term perspective can hold the stock with a wide stop-loss at Rs 285 for a target of Rs 350.
(Note: The recommendations are based on technical analysis. There is a risk of loss in trading.)