Investors with a short-term horizon can buy the stock of Bombay Dyeing & Manufacturing Co at current levels. Following a decline, the stock found support in the band between ₹63 and ₹65 in August 2014. Since then, this support band consistently provided a base and prevented the stock from declining further. The stock is now moving in a sideways consolidation phase in the range between ₹63 and ₹76.
Taking support in December and early January, the stock started to move upwards. On Tuesday, it emphatically broke a significant resistance at ₹67 and moving average compression by gaining 8 per cent, with impressive volume. The stock is now hovering well above its 50- and 200-day moving averages. The daily moving average convergence divergence indicator has signalled a buy. Our short-term outlook is bullish for Bombay Dyeing. It can extend the rally and reach the price target of ₹75 and then ₹76.5. Buy the stock with a stop-loss at ₹70.
(Note: The recommendations are based on technical analysis. There is a risk of loss in trading.)
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