Sterling Biotech

We recommend a buy in the stock of Sterling Biotech from a short-term perspective. It is evident from the charts that the stock has been trending down, forming lower peaks and troughs since the August 2008 peak of Rs 263. However, the stock's significant long-term support at Rs 90 arrested its downward movement in early November. The stock took support at this level and has been on a short-term uptrend since then. This trend reversal is also backed by positive divergence displayed in the weekly moving average convergence and divergence indicator. On December 16, the stock penetrated its medium-term downtrend-line and 21-day moving average by jumping 6 per cent accompanied with heavy volume. The daily relative strength index (RSI) is on the brink of entering the bullish zone from the neutral region and weekly RSI is likely to enter the neutral region from the bearish zone, showing signs of optimism. From a short-term trading perspective we are bullish on the stock. We anticipate it to move up until it hits our price target of Rs 109. Traders with short-term perspective can buy the stock while maintaining a stop-loss at Rs 93.5.

via BL