Today's Pick - MTNL

We recommend a buy in Mahanagar Telephone Nigam Ltd (MTNL) from a short-term perspective. It is evident from the charts of MTNL that from its 52-week high of Rs 219, the stock tumbled steeply during January 2008. This down-move continued until the stock found support at Rs 83 in early July. Since then it has been charting a short-term uptrend. We notice that the stock has formed a falling wedge pattern (a bullish pattern), spanning over the past five months. On July 24, th e stock broke out of this falling wedge pattern by gaining 7 per cent with extraordinary volume. The stock is trading well-above its 21- and 50-day moving averages. The daily relative strength index (RSI) is featuring in the bullish zone. The weekly RSI is displaying a prolonged positive divergence and has entered into the neutral region from the bearish zone. The moving average convergence and divergence has entered into the positive territory. Our short-term forecast of the stock is bullish. We expect the stock to move up until it hits our price target of Rs 115 in the upcoming trading sessions. Traders with short-term perspective can buy the stock, while maintaining a stop-loss at Rs 98.