Investors with a short-term perspective can buy the stock of Indigo Paints at current levels. After listing in early February this year, the stock started to decline and was on a short-term downtrend until it recorded a 52-week low at ₹2,191 in mid-April. The stock subsequently took support at around ₹2,270 and began to trend upwards. On the upside, the stock has met with a resistance at around ₹2710 in June and this level had limited the up-move in July.
Following a near-term down-move the stock found support at ₹2,400 and halted the decline last week. Triggered by positive divergence in the daily relative strength index the stock reversed direction and started to trend upwards. On Monday, the stock jumped 5.4 per cent with good volume and has breached the immediate resistance at ₹2,490 levels. Also, it has managed to close above the 21- and 50-day moving averages.
Overall the short-term outlook is bullish for the stock. It can extend the up-move and reach the price targets of ₹2670 and ₹2720 in the coming trading sessions. Traders can buy the stock with a stop-loss at ₹2510 levels.
(Note: The recommendations are based on technical analysis. There is risk of loss in trading.)