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We recommend a sell in Cummins (I) at current levels. From the charts of Cummins, we note that the stock has been on a steady long-term uptrend since July 2006 low. However, we note that the stock consolidated sideways for more than two weeks, after recording an all-time high of Rs 462.8 (on September 27). On October 17th, the stock penetrated the medium term up trendline and the 21-day moving average by tumbling Rs 23. We see that the daily Relative Strength Index (RSI), which is momentum indicator, is showing bearish momentum and the weekly Relative Strength Index is displaying bearish divergence. MACD (moving average convergence divergence) indicator also portends bearishness in the stock. Short-term investors can sell the stock with a stop loss at Rs 440. We expect the stock to decline to Rs 400 and then to Rs 360 in the short term.

BL Research Bureau

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