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We recommend a buy in the stock of Mahindra Forgings from a short-term perspective. It is apparent from the charts of the stock that following an intermediate-term downtrend, the stock found support at around Rs 35 in April and bottomed out. It formed an inverse head and shoulders pattern, a bullish reversal pattern spanning between February and early June with neckline at Rs 47. In early June, the stock broke out of this pattern and continued to trend northwards. Medium-term trend is up for the stock. Following a near-term correction, the stock found support at around Rs 60 last week.
On Wednesday, reinforcing the uptrend the stock advanced 4.7 per cent with good volumes. It is hovering well above its 50- and 200-day moving averages. The daily relative strength index has re-entered the bullish zone from the neutral region and weekly RSI is featuring in the bullish zone. The weekly moving average convergence divergence is moving higher in line with the stock price and has entered the positive territory.
Our short-term outlook on the stock is bullish. We expect its up-move to continue and reach our price target of Rs 65.5 or Rs 67 in the approaching trading sessions. Traders with short-term perspective can buy the stock with stop-loss at Rs 61.2 level.
( Note: The recommendations are based on technical analysis. There is a risk of loss in trading.)
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