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On Wednesday, Patel Engineering shares gained more than 10 per cent with above average volume. Investors looking for a contrarian buy can consider the stock at current levels.
Since the June 2014 peak of ₹152, the stock has been on an intermediate-term downtrend. Both the medium- and short-term trends were down. But the stock found support at its long-term base level of ₹60 and recorded a 52-week low at ₹58 on Tuesday. The stock subsequently changed direction, triggered by positive divergence in the daily price rate of change indicator.
Its recent rally, which has helped the stock close above the immediate resistance level of ₹65, reinforces bullish momentum. The daily relative strength index has entered the neutral region. We are bullish on the stock from a short-term perspective. It can extend the current rally and reach the price target of ₹70 and ₹71.5 in the upcoming sessions. Buy the stock with stop-loss at ₹65.7.
(Note: The recommendations are based on technical analysis. There is a risk of loss in trading.)
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