Today's Pick - Bharat Forge

We recommend a buy in Bharat Forge from a short-term perspective. From the charts of Bharat Forge we see that the stock has been trending downward since its 52- week high of Rs 389 recorded this January. The stock was on a medium-term downtrend between early May and early July (from Rs 318 to Rs 215). However, the stock reversed direction recently after taking support at Rs 220 (a long-term support level).

This reversal has been supported by the positive divergence in the daily moving average convergence and divergence. The stock gradually breached its medium-term down trendline recently. Moreover, on July 17, the stock jumped up 6 per cent crossing over the 21-day moving average. The daily momentum indicator is rising in the neutral region and the weekly momentum indicator is on the verge of entering the neutral region from the bearish zone.

We are bullish on the stock in the short-term. We expect the stock’s current up move to continue until it hits our price target of Rs 265 in the forthcoming trading sessions. Traders with short-term perspective can buy the stock while maintaining stop-loss at Rs 228.

via BL