Investors with a medium-term perspective can consider buying the stock of MEP Infrastructure Developers (₹82.6), a leading infrastructure operator, manager and toll collection company. In December 2016, the stock found support at around ₹34 and bottomed-out from this level.

Subsequently, the stock started to trend upwards and decisively breached a key long-term resistance at ₹64 in early 2017. It extended its uptrend and recorded an all-time high at ₹148 in July 2017.

The stock subsequently reversed direction and has been in an intermediate-term downtrend. After retracing 61.8 per cent fibonacci retracement level of the prior uptrend, the stock found support at ₹74.5 in early February this year.

The significant support at around ₹75 has buttressed the stock in late March as well as in April. Triggered by positive divergence in the daily price rate of change and moving average convergence divergence indicator, it appears to be changing its direction.

Last week, the stock gained 8.7 per cent, breaching the intermediate-term downtrend.

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There has been an increase in volume over the past four trading sessions. Taking a contrarian view on the stock, we are bullish from a medium-term perspective.

MEP Infrastructure Developers has the potential of trending upwards and touching our medium-term price target of ₹91 with a minor pause at around ₹88. Investors with medium-term perspective can consider buying the stock with a stop-loss at ₹79.

(This recommendation is based on technical analysis. There is a risk of loss in trading.)

 

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