ICICIdirect recommends buying Balkrishna Industries in the range of Rs 595-585 for target of Rs 672 with stop loss of Rs 550 on a closing basis.

Commenting on the rationale, the stock broker said,"The stock is a key outperformer within the auto ancillary space and remains in a well established up trend as exhibited by rising peaks and troughs.

An important observation on the price trend highlights that each rally has been of the magnitude of 120-140 points while corrections were shallow and retraced their preceding rally by 38.2%. Also, the rising 21-day EMA has acted as a support during counter trend corrections.

The consolidation over the past three weeks (600-550) once again highlighted inherent strength in the uptrend as the share price was seen finding support near 550 levels being the confluence of the 38.2% retracement of the preceding rally and rising 21-day EMA.

During the recent consolidation, the 14-day RSI retreated to its own support displacement near reading of 50 indicating underlying strength.

Based on historical evidence, we project an upside target of Rs 672 being price parity with previous rising leg (481-600=120 points) as projected from recent consolidation lows of Rs 552.''

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