Technical Analysis

Trading pick of the week: Buy Puravankara

Yoganand D | Updated on August 16, 2020

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

The stock found support, registering a multi-year low, at ₹28.6 in late March this year. Since then, it had been on a medium-term uptrend, gradually trending higher.

But a key resistance at ₹45 limited the stock’s upmove in June and it started to move sideways with a positive bias. A vital support at ₹39 provided a base for the stock and cushioned the downside.

Recently, the stock breached its 21- and 50-day moving averages and continued to trend up. On Friday, it jumped 10.5 per cent accompanied by above-average volumes, conclusively breaking above the key resistance level of ₹45, which is also a long-term hurdle.

There has been an increase in volume over the past six trading sessions. The stock now trades well above its 21- and 50-day moving averages.

The daily relative strength index (RSI) features in the bullish zone and the weekly RSI is likely to enter the bullish zone from the neutral region. Both the daily as well as the weekly price rate of change indicators are hovering in the positive terrain, implying buying interest. The breakthrough of the key resistance at ₹45 implies that the medium-term uptrend is intact.

The stock has the potential to trend upwards and reach the price targets of ₹53.5 and ₹58 over the medium term.

Investors can buy the stock with a stop-loss at ₹44.

Published on August 16, 2020

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