Technical Analysis

Stock trading call: Motherson Sumi (140.8) - Buy

Yoganand D | Updated on December 15, 2019 Published on December 15, 2019

Investors with a medium-term perspective can buy the stock of Motherson Sumi Systems at current levels.

Since it took support from a significant base in the band between ₹91 and ₹95 in early October, the stock has been in a medium-term uptrend.

But it encountered a key resistance at ₹136 in mid-November and thereafter witnessed a sideways movement. A key support at ₹121 and the 200-day moving average cushioned the stock in late November. Subsequently, the stock continued to trend upwards. On Friday, it gained 4 per cent with good volume, decisively breaking above the resistance level of ₹136. With this rally, the stock appears to have resumed its medium-term uptrend. Short-term trend is also up.

The stock trades well above its 50- and 200-day moving averages. The daily relative strength index (RSI) has entered the bullish zone from the neutral region, and the weekly RSI has also entered this zone, strengthening the bullish momentum. Moreover, the daily as well as the weekly price rate of change indicators hover in the positive terrain, implying buying interest.

Underpinning the medium-term uptrend, the stock has the potential to trend upwards in the ensuing weeks. The medium-term outlook is bullish for Motherson Sumi Systems. It can extend the uptrend and reach the price targets of ₹150 and ₹163 with a pause at ₹150.

Investors can buy with a stop-loss at ₹130.

Published on December 15, 2019
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