Tata Elxsi (Rs 273.3): Buy

We recommend a buy in the stock of Tata Elxsi from a short-term perspective. It is evident from the charts of the stock that following a medium-term downtrend from its March 2010 peak of Rs 347, it found support at a low of Rs 226 in August and started to trend higher. Since then, the stock has been on a short-term uptrend.

On October 1, the stock jumped more than 8 per cent, breaching its 21 and 50-day moving averages conclusively. Subsequently on Tuesday, the stock penetrated its medium-term down trendline that was in place from March by surging 7 per cent.

This up move has reinforced the stock's short-term uptrend. Moreover, we notice increase in volume over the past three trading sessions. The long-term trend is also up for the stock since March 2009.

The daily relative strength index has entered into the bullish zone from the neutral region and the weekly RSI is rising towards the bullish zone. Daily moving average convergence divergence oscillator has signalled a buy and is on the verge of entering into positive territory.

We are bullish on the stock from a short-term perspective. We anticipate the stock to move up further until it hits our price target of Rs 282 or Rs 290 in the ensuing trading sessions. Traders with short-term perspective can consider buying the stock with stop-loss at Rs 265.



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