We recommend a buy in the stock of E.I.D-Parry (India) from a short-term perspective. It is apparent from the charts of the stock that since peaking out from its October 2012 high of Rs 256, the stock has been on an intermediate-term downtrend. However, in early August, the stock found support at its long-term base zone between Rs 100 and Rs 110 and reversed direction triggered by positive divergence in weekly moving average convergence divergence indicator. The stock has been on a short-term uptrend since then. While trending higher, the stock tested its key resistance around Rs 120.
On Tuesday, it decisively broke out of this resistance by gaining 7.7 per cent accompanied by above average volume. The stock's up move has breached its 50-day moving average and is hovering well above 21- and 50-day moving averages. This rally has reinforced near-term bullish momentum. Daily price rate of change indicator is featuring in the positive area implying buying interest. We are bullish on the stock from a short-term perspective. We anticipate its rally to continue and reach our price target of Rs 134.5 or Rs 137 in the approaching trading sessions. Traders with short-term horizon can buy the stock with stop-loss at Rs 126.5 level.
( Note: The recommendations are based on technical analysis. There is a risk of loss in trading.)