Crompton Greaves

Investors with a short-term perspective can consider buying the stock of Crompton Greaves. It is apparent from the charts of the stock that after marking an all-time high of Rs 279 on April 15, it has started to decline.

The stock, however, recently found support at Rs 223, which is a 23 per cent Fibonacci retracement of its prior uptrend that commenced from March 2009 low of Rs 57.

This level of Rs 223 is also a significant medium-term support level. The support has, with its 200-day moving average positioned at Rs 223, provided support for the stock. The stock rebounded 4 per cent on Wednesday, taking significant support.

Moreover, the positive divergence displayed in the daily relative strength index backs the stock's rebound. The daily RSI has entered the neutral region from the bearish zone and weekly RSI is hovering in the neutral region. Taking in to consideration the important support and the positive divergence, we are bullish on the stock from a short-term perspective.

We expect the stock to move up until it hits our price target of Rs 250. Short-term traders can buy the stock with stop-loss at Rs 225.

via BL