We recommend a buy in the stock of Engineers India from a short-term perspective. It is evident from the charts of the stock that after encountering resistance at Rs 190 in late April and early May this year, the stock resumed its long-term downtrend. Its long-term downtrend has been in place since peaking out in May 2010 at Rs 538. Nevertheless, the stock found support at around Rs 140 in early July and this support has been cushioning the stock since then. Triggered by positive divergence in the daily relative strength index and price rate of change indicator, the stock is on the brink of trend reversal. Moreover, the weekly moving average convergence divergence indicator is also displaying positive divergence backing the trend reversal. On Friday, the stock gained more than 2 per cent breaching its 21-day moving average. We notice that there is an increase in volume in the past three trading sessions. The daily RSI has entered the neutral region from the bearish zone and the weekly RSI is recovering from the oversold territory. Taking a contrarian stance on the stock, we are bullish on it from a short-term perspective. We expect its up move to continue and reach our price target of Rs 150 or Rs 153 in the approaching trading sessions. Traders with short-term perspective can buy the stock with stop-loss at Rs 1,41.3 level.
(Note: The recommendations are based on technical analysis. There is a risk of loss in trading.)