We recommend a buy in the stock of Atul Auto from a short-term horizon. It is seen from the charts of the stock that in August 2011, the stock took support around Rs 51 and resumed its long-term uptrend. Since then, the stock has been on an intermediate-term uptrend as well. Following a minor correction, the stock found support around Rs 90 in August 2012. Subsequently, the stock changed its direction and started to move upwards, triggered by positive divergence in daily indicators.

On Monday, strengthening its up move, the stock jumped 6.5 per cent, breaking through a key resistance at Rs 107. We notice that there is an increase in volume over the past two trading sessions. The stock is hovering well above its 21- and 50-day moving averages. The daily relative strength index is featuring in the bullish zone and weekly RSI has just entered this zone. Both daily as well as weekly price rate of change indicators are hovering in the positive terrain, implying buying interest.

Our short-term outlook is bullish for the stock. We anticipate its rally to prolong and reach our price target of Rs 118 or Rs 120.5 in the forthcoming trading sessions. Traders with a short-term perspective can consider buying the stock with stop-loss at Rs 111.

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