We recommend a buy in the stock of Ashok Leyland from a short-term perspective. It is apparent from the charts of the stock that after encountering resistance at around Rs 28 in November 2012 and early December, the stock stared to decline. Since then, it has been on a medium-term downtrend. However, the stock found support at around Rs 22.3 in mid-February 2013. The stock has significant long-term support in the band between Rs 22 and Rs 23. After testing this support zone last week, the stock bounced up strongly. On Friday, the stock gained 4.5 per cent with good volume. The daily relative strength index is displaying positive divergence indicating a potential trend reversal. Similarly, daily moving average convergence divergence indicator is also displaying positive divergence and has signalled a buy. The daily as well as weekly relative strength index have entered the neutral region from the bearish zone. The daily price rate of change indicator has entered the positive territory implying buying interest. Taking a contrarian view on the stock we are bullish on it from short-term perspective. We expect its up move to continue and reach our price target of Rs 24.2 or Rs 24.7 in the forthcoming trading sessions. Traders with short-term perspective can consider buying the stock with stop-loss at Rs 22.7 levels.

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