Today's Pick - Indian Hotels

We recommend a buy in Indian Hotels Company from a short-term perspective. From the charts of Indian Hotels Company, we note that the stock has been on a downward trend from its 52-week high of Rs 177, marked in early January 2008.

In late June, the stock penetrated a key support level of Rs 100 and witnessed a steep decline. However, this decline halted at around Rs 75 (which is also the low recorded in June 2006) and bounced by surging 6 per cent, accompanied with heavy volume on July 2.

We also notice a formation of a bullish engulfing candlestick pattern at this support level of Rs 75. The daily relative strength index of the stock has reversed after touching the oversold territory. Our short-term forecast for the stock is bullish.

We expect the stock to move up until it hits our price target of Rs 90 in the approaching trading sessions. Traders with the short-term perspective can buy the stock while maintaining stop-loss at Rs 75.

via BL