Investors with a contrarian view can buy the stock of Bharat Dynamics at current levels. After recording a 52-week high at ₹365 in early November this year, the stock began to decline. It witnessed a sharp fall in early December as well. But, a key medium-term support in the band between ₹280 and ₹285 arrested the stock’s fall in mid-December. Thereafter it moved sideways in a narrow range.

Triggered by positive divergence in the daily relative strength index and the price rate of change indicator, the stock changed direction taking support from the key base zone. On Thursday, the stock jumped 7 per cent accompanied by good volume, breaking above a key resistance at ₹295. This rally shows initial sign of bullishness.

The daily RSI has entered the neutral region from the bearish zone and the weekly RSI features in the neutral region. Further, the daily as well as the weekly price rate of change indicators have entered the positive terrain implying buying interest.

As the stock reverses higher from a key support zone, backed with positive divergence, taking a contrarian stance the short-term outlook appears to be positive. It can extend the rally and reach the price targets of ₹314 and ₹320 in the upcoming trading sessions. Traders can buy with a stop-loss at ₹295.

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

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