HDIL

We recommend buying the Housing Development and Infrastructure stock at current levels. The stock spiralled downward from its life-time high of Rs 1,112 recorded in January 2008 to Rs 69 in December 2008. Though the stock encountered selling pressure close to Rs 200, the decline is tapering in the zone between Rs 60 and Rs 70, leading to the expectation that a long-term trough is possible in this zone. Positive divergence in the monthly relative strength index supports this view. The range for the stock over the next 12 months is likely to be between Rs 70 and Rs 200. Investors can buy the stock as it moves closer to the lower boundary and book profits near the upper boundary.

The short-term view for this stock has turned positive since it has moved above its 50-day moving average as well as the previous trough at Rs 75. Investors with a greater penchant for risk can buy at current levels with a stop loss at Rs 74 and with the target of Rs 108.