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The stock of Bombay Dyeing & Manufacturing Company surged 7.5 per cent accompanied by above average volume on Tuesday and has surpassed a key near-term resistance at around ₹78. This rally provides investors with a short-term perspective an opportunity to buy the stock at current levels.
After registering a 52-week high at ₹89.8 in early March this year and the stock began to decline and was on a short-term downtrend until it found support at ₹64 in late April. Thereafter the stock changed direction and began to trend upwards. The stock breached a vital resistance at ₹72 in early May the continued to trend upwards.
The stock's recent up-move has also breached the 61.8 per cent fibonacci retracement level of the prior downtrend. The daily relative strength index has re-entered the bullish zone from the neutral region and the weekly RSI is on the brink of entering the bullish zone. Outlook is bullish for the stock. It can continue to trend upwards and reach ₹84.5 and ₹86.5. Traders can buy the stock with a stop-loss at ₹79.
(Note: The recommendations are based on technical analysis. There is risk of loss in trading.)
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