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We recommend a buy in Alembic Ltd at current price level. It is evident from the weekly chart of Alembic that it has been moving sideways in a broad range between Rs 50 and Rs 85 since early 2006. But the trend in the stock has been up since the March low of Rs 50. This medium-term trend gained momentum on Tuesday, surging Rs 7 or 9 per cent accompanied by good volume. This spurt has made the stock test the upper boundary of the broad trading range. The giant bullish engulfing candle and the buy signals in the daily momentum indicators are very positive for the short-term. The stock has also moved beyond the long-term resistance at Rs 83. The immediate support for the stock is at Rs 83 and the next support is at Rs 80.

We expect the stock to move higher to Rs 99 in the short-term. Short term investors can buy the stock at current levels with stop at Rs 80.

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