The stock of VIP Industries gained 5 per cent accompanied with above average volume on Thursday, due to buying interest. Moreover, the stock has moved above the key level of ₹400 and has formed a bullish hammer candlestick pattern in the weekly chart depicting an upward reversal.

Investors with a short-term perceptive can buy the stock at current levels. After registering a new high at ₹645 in late August, the stock started to decline and fell sharply eroding the gains made in the months of July and August this year. However, the stock found support at its long-term base in the ₹390-400 band last week. Following a blip below this support, the stock marked an intra-week low at ₹374.5 and bounced up strongly. This up-move is triggered by a positive divergence in the daily relative strength index and the price rate of change indicators.

Both the indicators are charting upwards now, in line with the stock price. As the stock is reversing higher from a key long-term support zone backed with a positive divergence, the short-term outlook appears to be bullish.

The stock can extend its up-move and hit the price targets of ₹435 and ₹443 in the short term. Traders can buy the stock with a stop-loss at ₹408.5.

(Note: The recommendations are based on technical analysis. There is a risk of loss in trading.)

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