Cummins India

We recommend a buy in Cummins India at current market price from a medium-term perspective. As is evident from the charts of Cummins India, the stock formed a sloping head and shoulders price pattern spanning almost seven months between mid June 2007 and early January 2008. In early January, the stock penetrated the sloping neckline of the head and shoulders pattern at around Rs 400 level and in a short time period it achieved the price target indicated by this pattern. Ho wever, the stock found support at the key support zone between Rs 295 and Rs 310 and is currently hovering above this level. We also see that the stock has retraced 61.8 per cent (fibonacci retracement level) of the long-term uptrend that commenced in July 2006 and has reversed from this level. The daily momentum indicator has recovered from the oversold region and is likely to enter the neutral region. The immediate support for the stock is at Rs 295 and the next support level is at Rs 250. Considering the stock's significant support range, we believe that the downside for the stock is limited. We are bullish on the stock in the medium-term and expect the stock to move up to Rs 420. Medium-term investors can buy the stock with stop loss at Rs 265 levels.

Via Businessline