We recommend a buy in the stock of Fedders Lloyd Corporation from a short-term perspective. It is apparent from the charts of the stock that it has been on an intermediate-term downtrend since it encountered resistance at around Rs 114 in October 2010.

However, the stock found support around Rs 70 which is a significant long-term base level in May and started to consolidate sideways. It formed a falling wedge pattern spanning over last two months which is a bullish reversal pattern in this scenario.

The stock again took support at Rs 70 recently and changed its direction triggered by a positive divergence in daily moving average convergence divergence indicator. On Monday, the stock broke out the falling wedge pattern by surging more than six per cent. There is an increase in volumes over the past two trading sessions. The stock is hovering well above its 21- and 50-day moving averages.

Daily relative strength index has entered in to the bullish zone and weekly RSI is heading towards this zone in the neutral region. Price rate of change indicators have entered into the positive territory signalling buying interest.

We are bullish on the stock from a short-term perspective. We expect it to move higher and touch our price target of Rs 80 or Rs 82.5 in the in the days ahead. Short-term traders can buy the stock with stop-loss at Rs 75 levels.

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