We recommend a buy on Crompton Greaves from a short-term horizon. It is apparent from the charts of Crompton Greaves that it had been on an intermediate-term downtrend from September high of Rs 277 till it found support at Rs 106 in early December.
The stock witnessed sharp sell-off during October and November 2008. However, after taking support at Rs 106, it moved higher. This rally was stalled at Rs 155. Recently, the stock took support around Rs 120 (a strong long-term support level) and bounced up penetrating the intermediate-term down trendline. The stock rallied 12 percent over the past two trading sessions penetrating its 21 and 50-day moving averages.
We also notice high volume accompanying this rally. The daily relative strength index has entered in to the bullish zone from the neutral region. The weekly RSI has entered the neutral region from the bearish zone. Our short-term outlook is bullish for the stock. We anticipate it to move up until it hits our price target of Rs 150. Traders with short-term perspective can buy the stock while maintaining a stop-loss at Rs 128.
Source: HBL
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