We recommend a buy in the stock of Polaris Software Lab from a short-term horizon. It is apparent from the charts of the stock that after encountering significant long-term resistance at around Rs 210 in April this year, it started to decline. Since then, the stock has been on a medium-term downtrend.

It emphatically broke through its key long-term support at Rs 165 tumbling six per cent on August 8, and accelerated its downtrend. Following a sharp decline to its 52-week low at Rs 122 on Tuesday, the stock found support at that level. In the last trading session, the stock bounced up gaining seven per cent.

This up move has engulfed its previous candlestick and has formed a bullish engulfing candlestick pattern signalling a reversal. We see that there has been an increase in volumes over the past five trading sessions. Moreover, we notice formation of a dragonfly doji candlestick pattern in weekly candlestick chart indicating bullishness.

Both daily and weekly relative strength indices are recovering from the oversold territory. Taking a contrarian view on the stock, we are bullish on it from a short-term horizon. We anticipate it to move higher and reach our price target of Rs 137.5 or Rs 142 in the approaching trading sessions. Short-term traders can buy the stock with stop-loss at Rs 129.5.

Related Topics
comment COMMENT NOW