Today's Pick - Praj Industries

We recommend a buy in Praj Industries from a short-term perspective. It is apparent from the charts that the stock has been on a medium-term uptrend from its March 2008 low of Rs 100, which is a significant support level. However, the stock encountered resistance at around Rs 220 in late May and declined to Rs 140 (retracing 61.8 per cent fibonacci retracement of its prior uptrend). Subsequently, the stock resumed its medium-term uptrend. We also notice an inverse head and shoulders pattern, (a continuation pattern in this scenario) spanning over the past two months. On July 23, the stock broke through the neckline of this pattern by gaining 4 per cent on above average volume. The stock is trading well above its 21 and 50-day moving averages. The daily relative strength index has entered into the bullish zone. The moving average convergence and divergence has entered the positive territory, reinforcing our bullish stance. Our short-term forecast of the stock is bullish. We anticipate the stock to move up until it hits our price target of Rs 225 in the upcoming trading sessions. Traders with short-term perspective can buy the stock, while maintaining stop-loss at Rs 190.