Bajaj Auto

We recommend a buy in Bajaj Auto with a short-term trading horizon. It is evident from the charts of Bajaj Auto that it has been on an intermediate-term uptrend from its all-time low of Rs 294, recorded in early December. Since then, the stock has been forming higher peaks and higher troughs. While trending up, the stock breached its 50-day moving average in early January. On January 16, the stock conclusively broke through a key resistance level at Rs 450 by gaining 6 per cent. This resistance level is currently acting as a significant support level. Moreover, the stock recently took support from this level and resumed its uptrend. Reinforcing the uptrend, the stock jumped by almost 5 per cent on above average volume on February 18. The daily relative strength index (RSI) has entered the bullish zone and the weekly RSI is rising in this neutral region towards this zone. Our short-term outlook is bullish on the stock. We expect it to move up until it hits our price target of Rs 550. Traders with short-term perspective can buy the stock while maintaining a stop-loss at Rs 471.