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We recommend a buy in the stock of Elgi Equipments from a short-term perspective. It is evident from the charts of the stock that following a medium-term downtrend from its January high of Rs 99, the stock found support at around Rs 75 in April. After retesting this support in June, the stock changed direction triggered by positive divergence in daily price rate of change indicator. Since then, the stock has been on a short-term uptrend.
On Monday, the stock jumped 6 per cent beaching its 200-day moving average and testing key resistance at Rs 86. In previous session it advanced 3.4 per cent with extraordinary volume, reinforcing the uptrend. The stock is hovering well above its 50- and 200-day moving averages. The daily relative strength index is featuring in the bullish zone and weekly RSI has entered this zone from the neutral region. The daily moving average convergence divergence indicator is hovering in the positive area implying upward momentum. Both daily and weekly price rate of change indicators are featuring in the positive territory indicating buying interest.
We are bullish on the stock from a short-term perspective. We expect the stock’s uptrend to continue and reach our price target of Rs 94 or Rs 96 in the approaching trading sessions. Traders with short-term perspective can buy the stock with stop-loss at Rs 88 level.
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