Today's Pick - ABG Shipyard

We recommend a buy in ABG Shipyard from a short-term perspective. From the charts of ABG Shipyard, we see that the stock had formed a double top pattern spanning almost two months between November 2007 and January 2008 with baseline at Rs 870. On January 21, the stock conclusively penetrated the baseline of the double top and achieved the pattern price target. Thereafter, the stock continued to decline and found support at around Rs 600. This level almost coincides with 20 0-day moving average and a key support level. Triggered by positive divergence in the daily momentum indicator, the stock has recently commenced a short-term up-trend. This up move has breached the medium-term down trendline and 21-day moving average. We notice a crossover in the daily moving average convergence divergence, which indicates establishment of bullishness. Our short-term outlook for the stock is bullish. We expect the stock’s existing up move to continue to our target price of Rs 840 in the short-term. Investors with a short-term perspective can buy the stock while keeping the stop loss at Rs 698.