Today's Pick - Lanco Infratech

We recommend a sell in the Lanco Infratech stock from a short-term perspective. It is clearly evident from the charts of Lanco Infratech that the stock had been on long-term uptrend from its April 2007 low of Rs 137 to its all-time high of Rs 887 marked in the middle of December 2007. However, the stock has since reversed direction and has declined from its all-time high. The bearish divergence in the daily momentum indicator supports this trend reversal. The stock has bee n on a medium-term downtrend since mid-December.

During this downtrend, the stock conclusively penetrated the 50-day moving average line and then the long-term uptrend line in the last week of January. Following this, on February 11, the stock tumbled by 16 per cent, decisively penetrating the support range of Rs 450-475. We also note that the stock has been falling amidst increasing volumes for the past three trading sessions. The daily momentum indicator has re-entered the bearish zone, indicating further room for decline.

We are bearish on the stock in the short-term. We expect the stock’s medium-term downtrend to persist until the stock touches our target price of Rs 300 in the short-term. Investors with a short-term perspective can sell or book profit in the stock with stop loss at Rs 455 levels.