We recommend a buy in the stock of Apollo Tyres from a short-term perspective. It is evident from the charts of the stock that following its all-time high of Rs 88 marked in September 2010, it was on a medium-term downtrend until it found support at its long-term base of around Rs 45 in early February 2011. With positive divergence displayed in the weekly relative strength index and due to the presence of significant long-term support at this level, the stock changed direction . Since then, Apollo Tyres has been on a short-term uptrend. The stock jumped 7 per cent on March 1, breaching its 21-day moving average conclusively and also formed a bullish engulfing candlestick pattern. Moreover, on Tuesday the stock surged 4 per cent, decisively penetrating its immediate resistance at Rs 60 as well as its 50-day moving average.

We notice that there has been an increase in daily volumes over the past six trading sessions, strengthening the bullish momentum. The daily RSI has entered the bullish zone from the neutral region and the weekly RSI is heading towards the bullish zone. Daily moving average convergence divergence indicator has entered the positive territory implying upward momentum. We are bullish on the stock from a short-term horizon. We expect its up move to prolong until it hits our price target of Rs 64 or Rs 66 in the approaching sessions. Short-term traders can consider buying the stock with stop-loss at Rs 60.

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