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We recommend a buy in the stock of Escorts from a short-term perspective. It is evident from the charts of the stock that it has been on a medium-term downtrend from its April peak of Rs 149. However, after hitting a 52-week low at Rs 63 in mid-August, the stock found support at its significant base zone between Rs 63 and Rs 65 and reversed direction. This trend reversal was also backed by a positive divergence in daily relative strength index.
The stock has been on a nascent short-term uptrend since then. On October 13, the stock surged 4.5 per cent with an extraordinary volumes, emphatically breaching its 21- and 50-day moving averages and has managed to close above its immediate resistance at around Rs 77. Daily RSI is on the brink of entering into the bullish zone from the neutral region and weekly RSI is recovering from the oversold territory.
Daily moving average convergence divergence indicator is moving northwards in line with the stock price implying upward momentum. We are bullish on the stock from a short-term perspective. We expect the stock's short-term uptrend to continue and touch our price target of Rs 80 or Rs 82.5 in the days ahead. Traders with short-term perspective can buy the stock with stop-loss at Rs 75.5.
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