We recommend a buy in the stock of Edserv Softsystems from a short-term perspective. It is evident from charts of the stock that it has been on a long-term downtrend from its September 2010 peak of Rs 296. In early August this year, the stock breached its important support at around Rs 120 and continued to decline until it found support in early October at Rs 83. However, the stock changed its direction triggered by positive divergence in daily moving average convergence divergence indicator.

On Monday, the stock advanced more than three per cent penetrating its immediate key resistance and its 21-day moving average at around Rs 95. The stock has also penetrated its short-term downtrend-line. We notice that there is an increase in volumes over the past five trading sessions. The 14-day relative strength index is rising in the neutral region towards the bullish zone and weekly RSI is on the brink of entering into the neutral region from the bearish zone.

Daily MACD has signalled a buy. Further daily price rate of change indicator is featuring in the positive territory implying buying interest. Taking a contrarian stance on the stock, we are bullish on it from a short-term perspective. We anticipate its up-move to continue until it hits our price target of Rs 102.5 or Rs 105.5 in the days ahead. Traders with short-term perspective can buy the stock with stop-loss at Rs 97.

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