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We recommend a buy in the stock of Aries Agro from a short-term perspective. It is evident from the charts of the stock that after encountering resistance at Rs 200 in late September 2010, the stock started to decline and was on a medium-term downtrend. However, after retracing approximately 61.8 per cent Fibonacci retracement level of its prior up move, the stock found support in the band between Rs 95 and Rs 100 in early February 2011. Moreover, Rs 100 is key medium-term support level. Subsequentlytriggered by positive divergence in the daily relative strength index as well as moving average convergence divergence indicator, the stock reversed direction. It has been on a short-term uptrend since then.
On March10, the stock conclusively broke through its medium-term downtrend line and 50-day moving average by jumping seven per cent with good volumes. With this, the stock appears to have resumed its long-term uptrend. The daily RSI has entered the bullish zone and daily MACD is on the verge of entering the positive territory implying upward momentum. We are bullish on the stock from a short-term perspective. We anticipate its up move to continue until it reaches our price target of Rs 127 or Rs 130 in the days ahead. Traders with short-term perspective can consider buying the stock with stop-loss at Rs 119.5.
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