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We recommend a buy in the stock of Patel Engineering from a short-term perspective. It is seen from the charts of the stock that after recording a multi-year low at Rs 73 on December 20, the stock bottomed out. This reversal has been backed with positive divergence in weekly relative strength index and weekly moving average convergence divergence indicator. Since then, the stock has been on a short-term uptrend.
While trending higher, the stock breached its 21- and 50-day moving averages emphatically and is trading well above them. Further, the stock decisively penetrated its key resistance at around Rs 91 in the previous trading session. Reinforcing its up move, the stock rose five per cent on January 19. We observe that there is an increase in volume over the past nine trading sessions. The daily RSI is hovering in the bullish zone and weekly RSI is featuring in the neutral region.
Both daily and weekly price rate of change indicators are featuring in the positive territory signalling buying interest. We are bullish on the stock from a short-term perspective. We anticipate the stock's up move to continue and touch our price target of Rs 101.5 or Rs 104.5 in the forthcoming trading sessions. Traders with short-term perspective can consider buying the stock with stop-loss at Rs 95.5.
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