We recommend a buy in the stock of NELCO from a short-term horizon. It is seen from the charts of the stock that it found base at its long-term significant support level of Rs 67 in mid March 2011 and bottomed out. This reversal was triggered by positive divergence displayed in the daily relative strength index and moving average convergence divergence. Since then, the stock has bee on a short-term uptrend. It breached its 21- and 50-day moving averages during first week of April and is trading well above them.

On Tuesday, the stock conclusively broke through one of its long-term resistance around Rs 89 by jumping 6.7 per cent. We notice that there has been an increase in volumes over past three trading sessions. The 14-day RSI is featuring in the bullish zone and weekly RSI is rising in the neutral region toward the bullish zone. Daily MACD is inching higher steadily in line with the stock price and is hovering in the positive territory implying upward momentum. Our short-term outlook on the stock is bullish.

We expect NELCO to move higher in the forthcoming trading sessions until it reaches our price target of Rs 97.5 or Rs 100. Traders with short-term perspective can consider buying the stock while maintaining stop-loss at Rs 92.

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