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The stock of Ashok Leyland jumped 9 per cent, accompanied by above-average volume and closed at ₹95.6.With this rally, the stock appears to have resumed its short-term uptrend that has been in place from the 52-week low of ₹77 recorded this February. Investors with a medium-term perspective can buy the stock at current levels.
Following an intermediate-term downtrend from the 52-week high of ₹167 registered in May 2018, the stock found support at around ₹77 this February. Subsequently, the stock changed direction triggered by positive divergence in the weekly relative strength index and price rate of change indicator.
Since then, the stock has been trending up, backed by good volume. In late March, after a minor corrective decline, the stock found support at ₹85and continued its uptrend. Last week, it conclusively breached its 21 and 50-day moving averages and traded well above these averages.
The daily relative strength index has entered the bullish zone from the neutral region and the weekly RSI features in the neutral region with an upward bias. Moreover, the daily and weekly price rate of change indicators feature in the positive terrain, indicating buying interest. With the resumption of the uptrend, the close above a key resistance at ₹93 is positive for the stock. The medium-term outlook is bullish and has the potential to extend the uptrend. The price targets are ₹105 and ₹110 with a minor pause at around ₹105. Traders with a medium-term view can buy the stock with a stop-loss at ₹88.5.
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