Stocks

Motherson Sumi Systems (₹123): Buy

Yoganand D BL Research Bureau | Updated on November 09, 2020 Published on November 10, 2020

Workers assemble wire harnesses at the Motherson Sumi Systems Ltd (file photo)   -  Bloomberg

Investors with a short-term perspective can buy the stock of Motherson Sumi Systems at current levels. The stock jumped 5 per cent on Monday with good volume, breaking out of a descending channel pattern. The stock had been trending downwards since it had encountered a key resistance at around ₹128 in mid-August this year and until last week.

In late October, the stock tested the lower trend line at around ₹104 and bounced up, taking support from this level. Moreover, with the recent breakthrough the descending channel pattern, the stock appears to have resumed the intermediate-term uptrend that has been in place since it recording a 52-week low at ₹48.5 in March this year.

Further, the stock trades well above the 50- and 200-day moving averages. The daily relative strength index features in the bullish zone and the weekly RSI is likely to enter the bullish zone from the neutral region. Both the daily and the weekly price rate of change indicators are hovering in the positive territory implying buying interest.

Overall, the short-term outlook is bullish for the stock. It can continue to trend upwards and reach the price targets of ₹128 and ₹131 in the coming trading sessions. Traders can buy the stock with a stop-loss at ₹120. (Note: The recommendations are based on technical analysis. There is a risk of loss in trading.)

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Published on November 10, 2020
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