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We recommend a buy in VSNL. The stock has been trading within a broad range of Rs 300-500 since August 2005. It reversed from the upper boundary of this trading range in July and has registered a sharp fall from there. This fall was arrested by the long-term trend line positioned at Rs 350. The momentum indicators in the daily chart are currently signalling a buy. Short-term investors can buy the stock at current levels with a stop at Rs 395. The stock is expected to rally higher towards the immediate resistance at Rs 440 in the near term. The presence of long-term average lines around this level makes it a potent resistance. The medium-term target for the stock is the upper boundary of the current trading range at Rs 510. Medium-term investors can buy in corrections with a deeper stop at Rs 355.

Note: In a buy recommendation the resistance would be the targets and the nearest support would be the stop loss; in a sell recommendation the supports would be the targets and the nearest resistance would be the stop loss; the recommendation would be valid for the current trading day only; LTP- Last traded price.

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