Larsen and Toubro (L&T) recorded its 52-week low of Rs680 in late October 2008. Thereafter it stock rallied smartly to a high of Rs960 levels in early November 2008.
Sharp decline in the past couple of weeks saw the stock correcting back to Rs700 levels. On Friday, it recorded smart gains after taking support at Rs700 levels. Daily chart indicates formation of higher bottom at Rs700 levels.
The long-term support level for the stock is placed at Rs680 levels. Friday’s smart rally has also led to formation of a bullish Engulfing candlestick pattern. The daily RSI has generated a secondary buy signal, whereas the Daily MACD is on the verge of generating a crossover buy signal.
Keeping in mind the above-mentioned technical evidences, we suggest traders to BUY the stock at current levels and on declines to support of Rs720-735 with a stop loss of Rs680 for target of Rs850 and Rs900.