Chart Focus: VIP Industries (₹532.3): Buy

The stock of VIP Industries sky-rocketed 15.5 per cent last week, breaking above significant resistances at ₹480 and ₹500. This rally provides investors with a medium-term perspective, an opportunity to buy the stock at current levels.

Following a medium-term downtrend from an all-time high of ₹645 recorded in late August, the stock found support at ₹374 in October.

Subsequently, it changed direction, triggered by positive divergence in the daily relative strength index as well as price rate of change.

Since then, the stock has been on a budding short-term uptrend. Last week’s rally has strengthened the uptrend While trending up, the stock decisively breached its 200 and 50-day moving averages and trades well above them. There has been an increase in daily volume over the past five trading sessions.

The daily relative strength index feature in the bullish zone and the weekly RSI is on the brink of entering the bullish zone from the neutral region. Both the daily as well as weekly price rate of change indicators feature in the positive territory, implying buying interest.

Moreover, the stock has surpassed a key resistance at ₹500 and 50 per cent retracement level of the prior downtrend around this level in the previous week. Outlook is bullish for the stock.

It can continue to trend upwards and reach the price targets of ₹620 with a small pause at around ₹600. Investors with a medium-term perspective can buy the stock with a stop-loss at ₹504 levels.

(This recommendation is based on technical analysis. There is a risk of loss in trading)

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