We recommend a buy in the stock of Mahindra Satyam from a short-term perspective. It is apparent from the charts of the stock that it found support at around Rs 62 in August 2011 and has since been on an intermediate-term sideways consolidation phase in the broad range between Rs 62 and Rs 82. Within this sideways movement, the stock took support at around Rs 66 and did a volte face last week.

On Thursday, the stock zoomed almost eight per cent accompanied by above average volumes. This rally has conclusively breached the stock's key resistance around Rs 75 and its 50- as well as 200-day moving averages. The daily relative strength index has entered into the bullish zone from the neutral region and weekly RSI is inching higher in the neutral region towards the bullish zone. The 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 the stock from a short-term perspective. We expect its up move to continue further and touch our price target of Rs 80 or Rs 82.5 in the forthcoming trading sessions. Traders with a short-term perspective can consider buying the stock with stop-loss at Rs 75.

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