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Investors with a medium-term perspective and contrarian view can buy the stock of Ucal Fuel Systems at current levels. Witnessing buying interest, the stock jumped 12.3 per cent, accompanied by extra-ordinary volume on Friday. There has been an increase in daily volume over the past three weeks. Following a short-term downtrend, the stock registered a 52-week low at ₹110 in early August and found support at this level. Subsequently, it changed direction, triggered by positive divergence in the daily relative strength index, and it began to trend upwards.
The stock had breached its 21-day moving average and a key resistance at ₹120 with a gap-up open on Friday. This floor of the gap at ₹120 will act as a significant support in the short term. The daily RSI is on the brink of entering the bullish zone from the neutral region. Similarly, the weekly RSI is on the verge of entering the neutral region from the bearish zone. Besides, the daily price rate of change indicator features in the positive terrain, indicating buying interest.
Taking a contrarian view, the medium-term outlook appears bullish for Ucal Fuel Systems. The stock can extend the rally and reach the price targets of ₹150 and ₹160 in the medium term, with a minor break or pause at around ₹150. Traders with a medium-term stance can buy the stock with a stop-loss at ₹119.
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