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We recommend a buy in Crompton Greaves from a short-term perspective. The stock was on a long-term downtrend from its November 2007 high of Rs 454, till it found support at around Rs 220 during May 2008. This (Rs 220) is a significant support level for the stock. Subsequently, the stock breached the long-term down trend-line and commenced its up move.

We believe that the long-term downtrend has come to an end. On June 11, the stock gained momentum by jumping up 5 per cent with above-average volume, penetrating the 50-day moving average. The daily Relative Strength Index is heading towards the bullish zone and the weekly RSI has recovered from the bearish zone. After displaying positive divergence, the moving average convergence and divergence is on the brink of entering the positive territory.

We are bullish on the stock in the short-term. We expect the stock to trend upwards until it hits our price target of Rs 280 in the approaching trading sessions. Traders with short-term perspective can buy the stock, while maintaining the stop-loss at Rs 238 level.

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