Cairn India has limited trading history that makes it difficult to pronounce a long-term view on the stock. But the stock appears to have strong support around its listing price of Rs 140.
Though there was a sharp decline below this level in the mayhem of October 2008, it rebounded strongly to close above this level in just two sessions. Next long-term support below Rs 140 would be the panic low of Rs 88 formed on October 27, 2008. Investors can hold the stock as long as it does not record a weekly close below Rs 125.
Key long-term resistance is at Rs 245. Reversal from this level can pull the stock lower towards Rs 165 or Rs 135. Investors with a medium-term perspective can divest some their holdings on a failure to move above this resistance.
That said, a break-out above Rs 245 will give the next long term target of Rs 342 for the stock. Stop loss for medium-term investors can be at Rs 165.
Our Research Team Views :
Day High Low Rs.188-180 on 29th April 2009 Monthly High Low Rs.210-169 6M H/L Rs. 208-131
Sectoral Trend - Neutral
This share has risen sharply more than 80% in the last 2 months. The following are the ideal ranges for buying and selling :
Buying Range : Rs.165-175 Selling Range : Rs. 225-230 short term
Wait for the price to the buying range on correction in the stock markets.
Holding period : 12-18 months Returns expected : 100% plus