Investors with a medium-term perspective can consider buying the stock of Crompton Greaves (Rs 150.9). The stock peaked in December 2010, registering an all-time high of Rs 349. Since then, it has been on a long-term downtrend, which accelerated in July 2011.

But the stock's long-term support at around Rs 111 provided base during November and December 2011. Triggered by prolonged positive divergence in weekly relative strength index and moving average convergence-divergence indicator, the stock reversed its trend in late December.

The stock has been on a modest medium-term uptrend since then. In late January 2012, the stock took support at around Rs 135 and resumed its medium-term uptrend.

It climbed 5 per cent reinforcing the bullish momentum in the previous week.

It is trading well above both the 21- and 50-day moving averages.

The daily RSI has re-entered the bullish zone from the neutral region and weekly RSI is steadily inching higher in the neutral region towards the bullish zone.

The daily MACD is moving higher in line with the stock price and is hovering in the positive territory indicating upward momentum.

Both the daily and weekly price rate of change indicators are featuring in the positive terrain implying buying interest.

Taking a contrarian stance on the stock we are bullish on it from a medium-term perspective.

We believe that Crompton Greaves has the potential to trend north and reach our medium-term price target of Rs 180. However, we don't rule out a minor pause at around Rs 167 while trending higher. Investors with medium-term perspective can consider buying the stock with deeper stop-loss at Rs 133.

Follow up — Educomp Solutions (Rs 249.6)

In line with our expectation, the stock increased 2.6 per cent last week.

We reiterate our medium-term bullish outlook on the stock with price target and stop-loss mentioned in the previous week.

(This recommendation is based on technical analysis. There is a risk of loss in trading.)

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