CEAT

We recommend a buy in the stock of CEAT from a short-term perspective. It is seen from the charts of the stock that it had been on an intermediate-term downtrend from its October 2009 peak of Rs 190 until it found support at around Rs 125 in May 2010. However, after hovering between Rs 125 and Rs 130 , the stock started to trend up and has since been on a medium term uptrend. On August 17, the sock jumped 12 per cent accompanied with good volumes, conclusively penetrating its 50 and 200-day moving averages. Thereafter, the stock decisively breached its intermediate-term downtrend line, signalling resumption of uptrend. Moreover, on Wednesday, the stock bounced up 6.6 per cent reinforcing the bullish momentum. The stock is trading well above its 50 and 200-day moving averages. The daily relative strength index has re-entered into the bullish zone from the neutral region and weekly RSI is on the brink of entering into this zone. Further, the weekly moving average convergence divergence oscillator is likely to enter into the positive territory implying upward momentum.




We are bullish on the stock from a short-term horizon. We expect the stock to rally further until it hits our price target of Rs 160 or Rs 165 in the approaching trading sessions. Short-term traders can buy the stock while maintaining stop-loss at Rs 150

via BL