We recommend a buy in the stock of Cairn India from a short-term perspective. It is seen from the charts of the stock that following an intermediate-term corrective downtrend between April peak of Rs 372 and August low of Rs 250, the stock found support at its long-term base level at Rs 250. However, the stock reversed its direction thereafter, continuing its long-term uptrend which has been in place since October 2008.

Since this August low, the stock has been on a medium-term uptrend, shaping higher peak and higher troughs. Taking twin support (short-term support and uptrend line) around Rs 293, the stock bounced up four per cent with good volume on December 19. This rally has formed a bullish engulfing candlestick pattern signalling short-term reversal in trend. Further, it has breached its 21- and 50-day moving averages.

Both daily and weekly relative strength index are inching higher in the neutral region towards the bullish zone. Considering that the stock's medium-term up trendline is intact and formation bullish engulfing pattern, we are bullish on the stock. We anticipate the stock to rally further until it hits our price target of Rs 315 or Rs 329 in the ensuing trading sessions. Traders with short-term perspective can consider buying the stock with stop-loss at Rs 300.

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