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We recommend a buy in the stock of Escorts from a short-term perspective. It is evident from the charts of the stock that since bottoming out in late July at Rs 55 (52-week low), the stock has been in a modest medium-term uptrend, shaping higher peaks and troughs. The stock recently took support at around Rs 65 and continued its up-move, breaching its 50- and 200-day moving averages.
On Monday, the stock surged almost 4 per cent, decisively breaking through its key immediate resistance at Rs 69. We observe that there is an increase in daily volumes in the past three trading sessions. It is hovering well above both its 50- and 200-day moving averages. The daily relative strength index is featuring in the bullish zone and weekly RSI is on the brink of entering this zone from the neutral region. Both daily and weekly moving average convergence divergence indicators are charting higher in line with the stock price implying upward momentum.
Moreover, daily as well as weekly price rate of change indicators are hovering in the positive terrain indicating buying interest. We are bullish on the stock from a short-term perspective. We expect the stock's rally to prolong and reach our price target of Rs 75 or Rs 76.5 in the forthcoming trading sessions. Traders with a short-term perspective can consider buying the stock with stop-loss at Rs 70.40 levels.
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