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Investors with short-term horizon can consider buying the stock of Elgi Equipments. It is evident from the charts of the stock that it has been in an intermediate-term uptrend from its January 2012 low around Rs 65. Medium-term trend has been up for the stock since its August low at Rs 77. Following a sideways consolidation, the stock decisively broke through its key resistance at Rs 90 by surging 7 per cent with good volume.
The stock is hovering well above its 50- and 200-day moving averages. The daily relative strength index has entered the bullish zone from the neutral region and weekly RSI is featuring in this bullish zone. The daily moving average convergence divergence indicator has signalled a buy. Both daily as well as weekly price rate of change indicators are hovering in the positive territory implying buying interest.
Considering that the stock’s medium-term uptrend-line is intact and recent breakthrough of key resistance, we are optimistic from a short-term perspective. We expect its rally to maintain and knock our price target of 99 or Rs 101 in the approaching trading sessions. Traders with short-term perspective can consider buying the stock with stop-loss at Rs 93.4 levels.
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