Mahindra Forgings

We recommend a buy in the stock of Mahindra Forgings from a short-term perspective. It is apparent from the charts of the stock that from its March low of Rs 35.3, the stock has been on an intermediate term uptrend. However, following a medium-term downtrend from March 2010 peak (Rs 145) to the May trough of Rs 85, the stock reversed higher. Subsequently, the stock formed a strong base at the support level Rs 100 before inching higher.



On October 4, the stock jumped almost 7 per cent with good volume breaching its 50 and 200-day moving averages. This move has reinforced the stock's bullish momentum. The daily relative strength index has entered into the bullish zone and weekly RSI is heading towards this zone in the neutral region. Daily moving average convergence divergence oscillator has signalled a buy and is hovering in the positive territory implying upward momentum.

The stock's intermediate-term up trend line is intact. Our short-term forecast on the stock is bullish. We anticipate its rally to prolong until it hits our price target of Rs 115 or Rs 120 in the approaching trading sessions. Traders with short-term perspective can consider buying the stock with stop-loss at Rs 109.

via BL