We recommend a buy in the stock of Transformers and Rectifiers (India) from a short-term perspective. It is apparent from the charts of the stock that after encountering key resistance at Rs 170 in July 2012, the stock started to trend downwards. Since then it has been on an intermediate-term downtrend. The stock decisively broke its key support at Rs 125 this January and continued its downtrend. Nevertheless, registering a 52-week low at Rs 74 in late March, the stock reversed direction. It has been on a short-term uptrend since then.
Reinforcing the bullish momentum, the stock advanced 10 per cent with good volume on Monday. This rally has breached the stock’s 21-day moving average. The daily relative strength index is likely to enter the bullish zone from the neutral region. Further, the weekly RSI has entered the neutral region from the bearish zone. The daily moving average convergence divergence indicator is moving higher in line with the stock price, implying bullish momentum.
We are bullish on the stock from a short-term perspective. We expect its rally to continue and reach our price target of Rs 99 or Rs 101 in the approaching trading sessions. Traders with short-term perspective can consider buying the stock with stop-loss at Rs 93.2 level.
( Note: The recommendations are based on technical analysis. There is a risk of loss in trading.)