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We recommend a buy in the stock of Kalyani Steels from a short-term perspective. It is seen from the charts of the stock that after bottoming out at December 2011 low of Rs 32, it started moving upwards. But the stock met with a key resistance at Rs 70 in February and subsequently began to decline. It has been on a corrective downtrend since then. Following a 61.8 per cent Fibonacci retracement of the stock's prior up move, it took support around Rs 46 in mid-May. This level also coincides with a significant base level. Hovering above this base level for almost four weeks, the stock surged 7.7 per cent accompanied by above average volume on Tuesday.
This up move is helped by a positive divergence displayed in daily moving average convergence divergence indicator. The daily price rate of change indicator has entered the positive territory indicating buying interest. Taking a contrarian stance, we are bullish on the stock from a short-term perspective. We anticipate it’s up move to continue and touch our price target of Rs 52 or Rs 53.5 in the approaching trading sessions. Traders with short-term horizon can buy the stock with stop-loss at Rs 48.5.
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