Investors with a short-term perspective and contrarian view can consider buying the stock of Emami at current levels. The stock has been in an intermediate-term downtrend since encountering a key resistance at ₹670 in January 2018. But, after marking a multi-year low at ₹246 on Monday, the stock bounced up from the intra-day low.
Witnessing buying interest, the stock gained 8.8 per cent with good volume on Tuesday. The stock has formed a hammer candlestick pattern in the weekly chart which is a bullish reversal pattern. The daily relative strength index is recovering from the oversold territory and the weekly RSI continues to feature in the oversold territory which also indicates possibility of a recovery.
With the stock reversing higher from a key support at around ₹250 and formation of a hammer candlestick pattern, the near-term outlook is bullish for the stock. It has potential to trend upwards and reach the price targets of ₹302.5 and ₹309 in the near term.
Traders can buy the stock with a stop-loss at ₹284.5.
(Note: The recommendations are based on technical analysis. There is a risk of loss in trading.)
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