Elecon Engineering Company – Buy Recommendation
Elecon Engineering Company - Recommended to buy from a short-term perspective. It is seen from the charts of the stock that it has been on an intermediate-term downtrend from its October 2010 peak of Rs 103. However, the stock found support at Rs 60 and bounced up sharply in February 2011, triggered by positive divergence in daily moving average convergence divergence.
Thereafter, long-term support at Rs 65 consistently cushioned the stock in March, May and June and arrested it from declining further. Triggered again by positive divergence in daily MACD and backed with significant support at Rs 65, the stock changed its trend from a short-term perspective. On Monday, the stock jumped 4 per cent with extraordinary volumes, conclusively breaking through its short-term down trend and its 21 as well as 50-day moving averages. Daily relative strength index has entered in to the bullish zone and weekly RSI is inching higher in the neutral region. The daily MACD has signalled a buy.
We are bullish on the stock from a short-term horizon. We expect it’s up move to continue until it reaches our price target of Rs 74.5 or Rs 76.5 in the ensuing trading sessions. Traders with short-term perspective can buy the stock with stop-loss at Rs 69.5 levels.
