Today’s pick is CUMMINSIND [stockquote]CUMMINSIND[/stockquote]. The stock started the year with a very quick up-move which experienced resistance around Rs. 500 levels. After many trials to break free, the stock traced down 20% to find the trend-line for support in June. Since then, the stock has been on an up-move and has seen a constant support from the trend-line. It saw its 52 weeks high of Rs. 542 in end December. In the last three months, the stock has moved -5% vs. +6% of the Nifty’s.
Oscillators RSI and CMO are nearing the over-sold territory and are suggesting a short-term bullish price action. The stock is close to the lower Bollinger band, which is suggesting a bullish move for the stock as well.
The MACD line and signal line are moving very close to each other unable to suggest any short-term direction, although the stagnating histograms level are suggesting a trend reversal. Long-term and short-term GMMA lines are very close to each other and are not able to point at the direction of stock movement.
CUMMINSIND’s average correlation with the Nifty is 0.49 is positive. The scrip will be replicating the movement of Nifty. [stockquote]NIFTYBEES[/stockquote]
CUMMINSIND has a historical volatility in the range of 0.4 to 1.0. The scrip’s volatility however is currently in the lower end of the range.
Given these technicals, we suggest a short-term Buy. A longer term watch is suggested, a call could be taken on the basis of spreading out of GMMA lines. To manage your risks we suggest having trailing stop-losses in case trend-reversal were to take place.
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