Investors with medium-term perspective can consider buying the stock of Eros International Media (Rs 190.4). Ever since registering a new high at Rs 277 in October 2011, the stock has been on an intermediate-term downtrend. But, the stock's significant long-term support in the zone between Rs 155 and Rs 160 arrested its decline in May .
Triggered by positive divergence in daily relative strength index and moving average convergence divergence oscillator, the stock reversed direction in early June this year. Since then, the stock has been on a nascent uptrend.
The stock skyrocketed 13 per cent the previous week, emphatically breaking through its key resistance at Rs 180. It has also breached its 21- and 50-day moving averages and is hovering well above them. We notice that there is an increase in daily volumes over the past five trading sessions.
The daily RSI is featuring in the bullish zone and weekly RSI is inching higher in the neutral region towards the bullish zone. In line with the short-term uptrend, the daily MACD is moving higher and has entered the positive territory implying upward momentum.
Both daily as well as weekly price rate of change indicators are featuring in the positive terrain implying buying interest.
We are bullish on the stock from a medium-term perspective. We believe that the stock of Eros International Media has the potential of trending higher and touching our medium-term price target of Rs 220 with a likely pause at around Rs 205.
Investors with medium-term perspective can consider buying the stock with deep stop-loss at Rs 175.
Follow up – Castrol India (Rs 530.2)
The stock fell 2.5 per cent the previous week. However, we are bullish on the stock from a medium-term perspective. We reiterate our bullish view while maintaining price target and stop-loss mentioned last week.
(This recommendation is based on technical analysis. There is a risk of loss in trading.)