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We recommend a buy in the stock of Amara Raja Batteries from a short-term horizon. It is apparent from the charts of the stock that following a medium-term downtrend from it all-time high of Rs 228 recorded in October 2010 to the February low of Rs 158, it found support at its significant long-term support band between Rs 155 and Rs 160.
Triggered by positive divergence in daily relative strength index as well as moving average convergence divergence indicator, the stock changed direction. Since then, it has been on a short-term uptrend. On March 16, the stock jumped four per cent with good volume, conclusively penetrating its medium-term downtrend-line and its 50-day moving average. The 14-day RSI has entered the bullish zone from the neutral region and weekly RSI is inching higher in the neutral region.
Daily MACD is on the brink of entering in to the positive territory signalling upward momentum. Both daily and weekly price rate of change indicators are featuring in the positive area indicating buying interest. Our short-term forecast on the stock is bullish. We expect it to rally further until it hits our price target of Rs 187 or Rs 191 in the ensuing trading session. Traders with short-term perspective can consider buying the stock with stop-loss at Rs 175.5.
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