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We recommend a buy in Maruti Suzuki India from a short-term perspective. From the charts of the stock it is clearly evident that it was on a long-term downtrend from its October 2007 high of Rs 1,252, forming lower peaks and lower troughs till late April 2008.

Triggered by the positive divergence in the daily momentum indicator, the stock began to move up taking support at around Rs 720 during late April. Since then the stock’s up move has been continuing. On May 15, the stock penetrated the long-term down trendline as well as the 50-day moving average by surging 3 per cent.

With this, we believe that the long-term downtrend of the stock has come to an end. We notice that there is an increase in volume traded over the past two trading sessions. The daily momentum indicator has entered the bullish zone. Also, the daily moving average convergence and divergence is on the brink of entering the positive territory.

Our short-term forecast for the stock is bullish. We expect it to rally to our target price level of Rs 910 in the upcoming trading sessions. Investor with short-term perspective can buy the stock while keeping the stop-loss at Rs 782.

BL Research Bureau

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