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We recommend a buy in the stock of Berger Paints India from a short-term perspective. It is seen from the charts of the stock that it found support around Rs 78, registering a 52-week low in late December 2011. The stock continued its long-term uptrend and has been on a medium-term uptrend since then. In early February this year, the stock breached its 200-day moving average and is hovering well above it.
After failing to surpass the significant resistance at Rs 110 in the past, the stock emphatically broke out by jumping seven per cent on Tuesday backed by extraordinary volumes. Both daily as well as weekly relative strength indices are featuring in the bullish zone.
The daily and weekly price rate of change indicators are hovering in the positive area implying buying interest. Considering that the stock's medium-term uptrend line is in tact and its recent breakout from key resistance, we are bullish on it in the near future. We expect the stock's uptrend to prolong until it hits our price target of Rs 118.5 or Rs 122.5 in the ensuing trading sessions. Traders with short-term perspective can consider buying the stock with stop-loss at Rs 112.
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