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Shares of Motherson Sumi Systems gained 3.6 per cent accompanied by above average volume on Wednesday and closed above the 21-day moving average.
After taking support at ₹111 in early June, the stock began to trend upwards and show signs of trend reversal. Taking a contrarian stance, investors with a short-term view can buy the stock at current levels.
The stock was on a short-term downtrend since encountering a key resistance at ₹160 in late April. But, it found support at ₹111 recently and changed direction triggered by positive divergence in the daily relative strength index (RSI) and price rate of change indicator.
The daily RSI has entered the neutral region from the bearish zone and the weekly RSI is likely to enter the neutral region from the bearish zone. Also, the daily price rate of change indicator hovers in the positive terrain implying buying interest.
The stock has surged 7 per cent so far this week with good volume. It has the potential to trend upwards in the short term. Targets are ₹127.5 and ₹130. Traders can buy with a stop-loss at ₹119.5.
(Note: The recommendations are based on technical analysis. There is a risk of loss in trading.)
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