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We recommend a buy in Areva T&D India from a short-term perspective. From the charts of Areva T&D, we see that it had been on a downtrend from its 52-week high of Rs 3,280 (recorded in November 2007) till June low of Rs 1,199. However, the stock found support at around Rs 1,300 (a long-term support level) and reversed direction.

On July 4, the stock conclusively broke out of the down trendline by jumping up by 9 per cent with good volumes. The stock’s reversal has been supported by the positive divergence in the daily relative strength index. The stock also crossed over the 21-day moving average. The daily relative strength index (RSI) is rising in the neutral region towards the bullish zone and the weekly RSI has entered in to the neutral region form the bearish zone.

Our short-term forecast for the stock is bullish and we expect it to move up until it hits our price target of Rs 1,564 in the forthcoming trading sessions. Traders with short-term perspective can buy the stock while maintaining stop-loss at Rs 1,349.

Yoganand D.

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