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We recommend a buy in the stock of Manappuram Finance from a short-term horizon. It is apparent from the charts of the stock that after recording a 52-week low at Rs 41.8 on August 26, the stock bottomed out and rallied sharply. However, the presence of significant long-term resistance in the band between Rs 58 and Rs 60 halted the stock's up-move in early- and mid-September.
After retracing 50 per cent Fibanacci retracement level, the stock found support around Rs 50 on October 5, and resumed its up move. On Tuesday, it climbed 4.5 per cent with above average volume, breaching its 21- and 50-day moving averages and also its immediate resistance level. Both daily and weekly relative strength indices are inching higher in the neutral region towards the bullish zone.
Daily as well as weekly price rate of change indicators have entered into the positive territory implying buying interest. We are bullish on the stock from a short-term horizon. We expect its up move to continue and reach our price target of Rs 55.5 or Rs 57.5 in the forthcoming trading sessions. Traders with short-term horizon can buy the stock with stop-loss at Rs 52.5.
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