We recommend a buy in the stock of EIH from a short-term perspective. It is evident from the chart of the stock that after encountering resistance at Rs 103 in early March this year, the stock started to decline. Subsequently, it went through a medium-term downtrend until it found support at its 52-week low registered on May 23 at Rs 74. After testing its key long-term support band between Rs 74 and Rs 76 for three weeks, the stock began to move higher in late June this year. This reversal was helped by positive divergence in daily relative strength index and moving average convergence divergence indicator. Since then, the stock has been on a short-term uptrend.
On Tuesday, the stock emphatically broke through a significant resistance zone between Rs 80 and Rs 82 by gaining five per cent with good volume. The daily RSI has re-entered the bullish zone and weekly RSI is inching higher in the neutral region towards the bullish zone. The daily MACD is moving higher in line with the stock price and is hovering in the positive territory implying upward momentum.
The stock is hovering well above its 21- and 50-day moving averages. We are bullish on the stock from a short-term perspective. We anticipate its rally to continue and touch our price target of Rs 87 or Rs 90 in the approaching trading sessions. Traders with short-term horizon can consider buying the stock with stop-loss at Rs 82.
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