After falling for several weeks, Muthoot Finance has bounced back from the support of Rs 1,000. These are strong supports as they are corresponding to previous intermediate highs and are also just above the 200-day EMA. The stock is now consolidating in a range between the Rs 1,136-1,274 levels.

Technical indicators are giving positive signals as the stock trades above the 20-day and 50-day SMA and momentum readings like the 14-day RSI have bounced back smartly from oversold levels.

With the technical setup looking positive on the daily and weekly charts, we expect the stock to gradually move higher in the coming weeks. We, therefore, recommend a buy between the Rs 1,200-1,250 levels. CMP is Rs 1,249.7. Stop loss is at Rs 1,130, while targets are at Rs 1,450.

[Subash Gangadharan, Technical Research Analyst, HDFC Securities]

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