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Investors with a medium-term perspective can buy the stock of Bharat Forge at current levels. The stock encountered a key resistance at around ₹530 in January 2020 and resumed its long-term downtrend.
Witnessing selling pressure, the stock plummeted steeply in March, breaking below a key support at ₹380.
However, it recorded a multi-year low at ₹207.8 in early April and changed direction, triggered by positive divergence in the daily relative strength index (RSI) as well as the daily price rate of change indicator.
Since then, the stock has been in a short-term uptrend. In mid-April, the stock breached its 21-day moving average, and now is hovering well above this line. Last Thursday, the stock decisively breached a key resistance at ₹290 by gaining 9.5 per cent, accompanied by above-average volume.
It jumped 17 per cent in the past week and strengthened the short-term uptrend. Further, there has been an increase in the daily volumes over the past one month. The daily RSI is on the brink of entering the bullish zone from the neutral region and the weekly RSI has entered the neutral region from the bearish zone.
Besides, the daily price rate of change indicator is hovering in the positive terrain, implying buying interest. Taking a contrarian stance, the short- to medium-term outlook appears to be bullish for the stock.
It has the potential to trend upwards and reach the price targets of ₹340 and ₹355. Traders with a medium-term view can buy the stock with stop-loss at ₹285.
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