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We recommend a buy in Asian Electronics at current levels. From the charts of Asian Electronics, we note that after hitting an all-time high at Rs 570 in late July, the stock began to decline and found support around Rs 350 in late October.

The stock’s movement since its all-time high appears to be a falling wedge pattern, which has a bullish implication. On October 31, the stock jumped by 9 per cent penetrating the 21-day moving average, accompanying with heavy volumes.

However, the stock is currently testing the resistance offered by the medium-term down trendline around Rs 450 levels. The daily momentum indicators are signalling a buy. Medium-term investors can buy the stock with stop loss at Rs 370.

We expect the stock to break through the falling wedge pattern and move up to Rs 550 in the medium term. Our short-term target for the stock is Rs 476.

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