Macmillan India

We recommend a buy in the stock of Macmillan India at current market price. From the weekly chart of Macmillan, we note that it has been on a long-term downtrend from its April 2006 high of Rs 550. After declining almost 63 per cent from the April 2006 high, however, the stock found support at Rs 200 in early December 2007 and began to move up. During this short-term up move, the stock has the crossed the 21-day and 50-day moving average lines. The positive divergence in the daily momentum indicator supports this trend reversal. The weekly momentum indicator has also recovered from the oversold region. The daily moving average convergence divergence is progressively rising and is on the verge of entering the positive region. We see that the volume has been increasing for the past four trading sessions. All these are positive signals. On the downside, the immediate support for the stock is at Rs 200 and the next support is at Rs 180 levels. We expect the stock to penetrate the down trendline and move up to Rs 270 level in the short-term. The short-term investors can buy the stock with stop at Rs 216.

Via BL