We recommend a buy in the stock of Atul from a short-term perspective. It is evident from the charts of the stock that after registering an all-time high at Rs 217 in November 2010, the stock declined. Since then, the stock has been consolidating sideways in a broad range between Rs 155 and Rs 200. Within this range, the stock made a corrective decline from its upper boundary and found support at Rs 175 in mid-May this year. Subsequently, this level provided strong support for the stock.
On Tuesday, the stock advanced six per cent taking support at Rs 175 and breached its 21- and 50-day moving averages emphatically. We notice that there is in increase in volume traded over past five trading sessions. The daily relative strength index has entered into the bullish zone from the neutral region, and weekly RSI is on the brink of entering into the bullish zone from the neutral region.
Daily moving average convergence divergence indicator has signalled a buy. Both daily and weekly price rate of change indicators are featuring in the positive territory implying buying interest. We are bullish on Atul from a short-term perspective.
We expect the stock to move higher until it touches our price target of Rs 195 or Rs 201 in the approaching trading sessions. Traders can buy the stock with stop-loss at Rs 183 levels.
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