We recommend a buy on the stock of Elgi Equipments from a short-term perspective. It is apparent from the charts of the stock that since taking support at around Rs 65 in January, the stock has been on an intermediate-term uptrend. Medium-term trend has also been up for the stock from its August low of Rs 77.
On Wednesday, the stock surged 7 per cent accompanied by extraordinary volumes, strengthening its uptrend and closed above key resistance at Rs 90. The stock is trading well above its 50- and 200-day moving averages. The daily relative strength index has entered the bullish zone from the neutral region and weekly RSI also entered this zone from the neutral region. Both daily and weekly moving average convergence divergence indicators are hovering in the positive territory implying upward momentum.
Medium-term uptrendline is intact. Our short-term outlook is bullish for the stock. We anticipate its up move to continue and reach our price target of Rs 95 or Rs 97 in the forthcoming trading sessions. Traders with short-term perspective can consider buying the stock with stop-loss at Rs 89.5 levels.