We recommend a buy in the stock of McNally Bharat Engineering Company from a short-term perspective. It is evident from the charts of the stock that following an intermediate-term downtrend, the stock found support at around Rs 38 in early August and changed direction. Since then, the stock has been on a short-term uptrend. Moreover, we notice formation of an inverse head and shoulders pattern, a bullish reversal pattern, spanning late June and early September, with neck line at Rs 50.

The stock emphatically broke out of this neck line and continued its short-term uptrend. It is hovering well above its 21- and 50-day moving averages. Further, the stock surged 6.5 per cent with above average volume, reinforcing the bullish momentum on Monday. There is an increase in daily volume in the past two trading sessions. The daily relative strength index is featuring in the bullish zone and weekly RSI is inching higher in the neutral region towards the bullish zone. Likewise, daily moving average convergence divergence indicator is hovering in the positive area. Both daily and weekly price rate of change indicators are featuring in the positive terrain implying buying interest.

We are bullish on the stock from a short-term perspective. We expect its rally to extend and reach our price target of Rs 63.5 or Rs 65 in the upcoming trading sessions. Traders with short-term perspective can buy the stock with stop-loss at Rs 59.3 level.

( Note: The recommendations are based on technical analysis. There is a risk of loss in trading.)

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