Praj Industries

We recommend a buy on the Praj Industries stock. Praj Industries is in a structural bear market since the lifetime high of Rs 273 recorded in late-2007. This long-term downtrend has, however, lost momentum since October 2008 and the stock is attempting to consolidate sideways since then. The lower end of this consolidation range is around Rs 50 that corresponds with the trough formed in February 2006. A falling wedge pattern, which is a bullish reversal pattern, is also apparent in the daily charts.

Investors with a three-month horizon can buy this stock with a stop-loss at Rs 49. The medium-term outlook is encouraging and an up move to Rs 70 levels is possible in this period. Long-term investors can also consider investing in this stock, while retaining the stop-loss at Rs 44. Following a likely sideways consolidation in the range between Rs 55 and Rs 70, the stock has potential to reach Rs 110 over a longer time horizon.