10 October, 2008

The Hindu Business Line recommend a buy in Ranbaxy Laboratories from a short-term perspective.

It is evident from the charts of Ranbaxy that it has been on an intermediate-term downtrend from its June high of Rs 613. This downtrend accelerated in the early part of September triggered by negative news flow. In September alone, the stock tumbled more than 50 per cent.

However, the stock found support at around Rs 240, which is a significant long-term support level.

 On October 8, the stock experienced bullish momentum by gaining 9 per cent accompanied with high volume.

Both the daily and weekly relative strength index have recovered from deep oversold territory.

We take a contrarian view on the stock for the short-term and anticipate a corrective up move until it hits our price target of Rs 308 in the impending trading sessions. Traders with short-term perspective can buy the stock while maintaining a stop-loss at Rs 265.