Investors with a short-term perspective can buy the stock of Bajaj Auto at current levels. Following an intermediate-term downtrend from the November 2014 peak of Rs.2,690, the stock found support in Rs.1,870-1,920 range in late April 2015. As this band is a long-term support band, the stock subsequently reversed upwards triggered by positive divergence in the daily moving average convergence divergence indicator.
On Tuesday, the stock surged 2.4 per cent accompanied by above average volume, breaching a key resistance at Rs.2,330. The stock has also gained 4.6 per cent decisively breaking the key resistance zone between Rs.2,300 and Rs.2,330 which is also a 50 per cent fibonacci retracement level. The weekly RSI is on the brink of entering the bullish zone from the neutral region. The short-term outlook is bullish for the stock. It can extend its rally and reach the price target of Rs.2,490 and then Rs.2,535 levels. Buy with a stop-loss at Rs.2,340 levels.
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