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We recommend a buy in Thermax from a short-term perspective. It is clearly evident from the charts of Thermax that the stock has been enjoying a bull run from its July 2006 low of Rs 206. However, after touching life high of Rs 968 in November 2007, the stock is currently in a corrective medium-term downtrend. The stock’s medium-term downtrend has retraced at 50 per cent fibonacci retracement of its prior up-trend that is around Rs 550. On February 13, the stock jumped up by 10 per cent, accompanied by above average volume. With this up move, the stock appears to have resumed the uptrend. The bullish divergence in the daily momentum indicator supports this resumption of the uptrend. The daily momentum indicator had recovered from the oversold region and is on the verge of entering the neutral region. Also the weekly oscillator has entered the neutral region from the bearish zone. Moreover, the long-term uptrend is still in place. We are bullish on the stock in the short-term. We expect the stock’s up move to continue further to our target price of Rs 770 in the short-term. Investors with a short-term perspective can buy the stock with stop-loss at Rs 550 levels.

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