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Investors with a medium-term perspective can consider buying the stock of Mahindra & Mahindra Financial Services (Rs 714.2), which funds tractors, utility vehicles and light commercial vehicles. After registering an all-time high at Rs 913 on November 15, the stock started to consolidate sideways in a broad range between Rs 600 and Rs 840. This sideways consolidation appears to be positive from a long-term perspective as the stock has retraced approximately 38.2 per cent Fibonacci retracement level of its prior up move and found support at around Rs 600 levels in first quarter of this calendar year. Further, the stock took support from this long-term base level of Rs 600 in late June and reversed upwards, triggered by positive divergence in daily moving average convergence divergence. Since then the stock has been on a budding uptrend. While trending higher, the stock emphatically breached its moving average compression (21, 50 and 200-day moving averages) at around Rs 660 levels and is hovering well above these averages. On July 22, reinforcing the uptrend, the stock jumped 4.6 per cent accompanied by above-average volumes, penetrating its immediate resistance at Rs 698 levels. The 14-day relative strength index is featuring in the bullish zone and weekly RSI is steadily inching higher in the neutral region towards the bullish zone. Daily MACD is featuring in the positive territory. Both daily as well as weekly price rate of change indicators are featuring in the positive terrain indicating buying interest.
We are bullish on the stock from a medium-term perspective. We believe that the stock has the potential of moving upwards to touch our price target of Rs 820 in the medium-term, following a minor pause at around Rs 760. Investors with medium-term horizon can consider buying the stock with stop-loss at Rs 660 levels.
Follow up – MOIL (Rs 356.2)
The stock retreated 2 per cent in the last week. However, we are bullish on the stock from a medium-term perspective and re-state our buy recommendation in the stock while retaining the price target and stop-loss mentioned last week.
(This recommendation is based on technical analysis. There is a risk of loss in trading.)
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