Markets

McNally Bharat Engineering Company (Rs 107.7): Buy

Yoganand D. | Updated on November 17, 2011 Published on November 17, 2011

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We recommend a buy in the stock of McNally Bharat Engineering Company from a short-term perspective. It is seen from the charts of the stock that it has been on a long term downtrend from its lifetime high of Rs 385 registered in April 2010. Both medium and short-term trends are also down for the stock. However, the presence of long-term significant support at Rs 100 is currently cushioning the stock. The stock has formed an inverted hammer candlestick pattern, a bullish reversal pattern, on Wednesday. It is considered to be a potential reversal pattern. In the succeeding trading session, the stock jumped 4.7 per cent signalling initial signs of bullishness. We notice that there has been an increase in volumes in the past three trading sessions. Moreover, daily as well as weekly moving average convergence divergence indicators and weekly relative strength index are displaying positive divergence indicating a potential trend reversal.

Taking a contrarian stance on the stock from a short-term perspective, we are bullish on it. We anticipate the stock's up move to continue and reach our price target of Rs 111 or Rs 114.5 in the upcoming trading sessions.

Traders with short-term perspective can consider buying the stock with stop-loss at Rs 104.5.

Published on November 17, 2011
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