Today's Pick

Mahindra Lifespace (Rs 368.4): Buy

Yoganand D | Updated on March 17, 2011

MahLife.jpg

We recommend a buy in the stock of Mahindra Lifespace Developers from a short-term horizon. It is evident from the charts of the stock that it is in a medium-term downtrend that was in place since its October 2010 peak of Rs 522. This move came to an end after retracing 50 per cent fibonacci retracement level of its prior uptrend and finding support in the band between Rs 300 and 310 in early February 2011.

Triggered by prolonged positive divergence in daily relative strength index, the stock reversed direction from its key support band and has been on a short-term uptrend. On Thursday, the stock zoomed almost nine per cent with good volume conclusively penetrating its down trend-line and its 21- and 50-day moving averages. Moreover, the stock has also breached its immediate key resistance at Rs 360. The daily RSI has entered the bullish zone from the neutral region and weekly RSI is hovering in the neutral region. Daily moving average convergence divergence indicator is featuring in the positive territory and has signalled a buy.

Considering the stock's recent break through of the downtrend-line and key resistance, we are bullish from a short-term perspective. We anticipate the stock to move higher until it reaches our price target of Rs 380 or Rs 391 in the approaching trading session. Traders with short-term horizon can consider buying the stock with stop-loss at Rs 359.

Published on March 17, 2011

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