Technical Analysis

Motherson Sumi Systems (₹158.6): Buy

Yoganand D BL Research Bureau | Updated on February 25, 2019 Published on February 26, 2019

The stock of Motherson Sumi Systems gained 11 per cent accompanied by extraordinary volume on Monday, decisively breaking above a key resistance at ₹150. Investors with a short-term view can buy the stock at current levels.

Following a short-term downtrend, the stock recorded a 52-week low at ₹127 in early February and found support at around ₹130. Subsequently, the stock changed direction triggered by positive divergence in the daily relative strength index. Since then, the stock has been on a near-term uptrend.

The stock’s recent rally has conclusively breached the 50-day moving average and it hovers well above this average. There has been an increase in daily volume over the past two trading sessions. The daily relative strength index has entered the bullish zone from the neutral region and the weekly RSI has entered the neutral region from the bearish zone. Both the daily and the weekly price rate of change indicators feature in the positive territory implying buying interest.

The near-term outlook is bullish for the stock. Targets are ₹165 and ₹168.5 levels. Traders can buy the stock with a stop-loss at ₹155.

(Note: The recommendations are based on technical analysis. There is a risk of loss in trading.)

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