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We recommend a buy in the stock of Amara Raja Batteries from a short-term horizon. It is seen from the charts of the stock that it has been on a long-term uptrend since bottoming around Rs 30 in early 2009. However, following a medium-term corrective downtrend, the stock found support around Rs 160 (which is a significant long-term support level) in late February. Since then, the stock has been on a nascent medium-term uptrend. The stock conclusively breached its 200-day moving average in early May and is trading well above it and as well as its 50-day moving average.
On Thursday, the stock jumped 5.6 per cent with above average volume penetrating its immediate resistance at Rs 210. The daily relative strength index has re-entered into the bullish zone and weekly RSI is featuring in the bullish zone. Both daily and weekly moving average convergence divergence indicators are hovering in the positive territory signalling upward momentum. Our short-term forecast on the stock is bullish. We expect its uptrend to prolong until it hits our price target of Rs 218 or Rs 226 in the forthcoming trading sessions. Traders with short-term perspective can buy the stock with stop-loss at Rs 207.5.
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