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Investors with a short-term perspective can buy the stock of Sonata Software at current levels. Since recording a 52-week low at ₹148 in late March this year, the stock has been in a medium-term uptrend. In late June the stock had breached a key medium-term resistance at ₹230 which subsequently turned into a key base. The stock took support at this level in mid-July and continued to trend upwards. Short-term trend is also up now.
On Wednesday, the stock gained 4.2 per cent with above average volume, strengthening the uptrend. The stock trades well above its 21- and 50-day moving averages. There has been an increase in daily volume over the past four trading sessions. The daily relative strength index has entered the bullish zone from the neutral region and the weekly RSI is trending upwards in the neutral region. Further, the daily and the weekly price rate of change indicator are hovering in the positive terrain implying buying interest.
Overall, the short-term outlook is bullish for the stock. It can continue to trend upwards and hit the price targets of ₹270 and ₹275 in the ensuing trading sessions. Traders can buy the stock with a stop-loss at ₹253.
(Note: The recommendations are based on technical analysis. There is a risk of loss in trading.)
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