Why does GEPL Cap have a 25% return call for Suzlon?

GEPL Capital is technically bullish on Suzlon Energy and has recommended buy rating on the stock with a target of Rs 68 in its April 8, 2011 research report.

Rationale:

• In the current rise of 700 points in Nifty from 5200 to 5900, Mid Cap and Small Cap stocks have been performing exceptionally well. Amongst the Mid Cap and Small Cap stocks some stocks are indicating beginning of a fresh intermediate uptrend and in this scenario Suzlon is showing early signs of forthcoming bul run.
• Suzlon has formed an all time high near 460 levels in Jan 2008 and thereafter has been in a strong bear trend. It made an all time low of 33 in March 2009.
• Suzlon has been forming a terminating pattern for the past thirty months and tracing out a Triangle on the weekly charts, suggesting that the stock is in the final stages of the previous down trend.
• Presently Suzlon is near the verge of an upward breakout of its intermediate resistance and 200-DMA placed above 57. A break out beyond 57 is likely to trigger further upsides which may take the stock higher levels.
• If the upward breakout is materialized then the immediate targets are placed at Rs 68 & 80, these are the resistance levels seen on the weekly closing chart.
• A double bottom structure and the low of above mentioned triangular pattern at Rs 42 will act as a stop loss on closing basis.
• The stock is currently recommended for buying in the range of Rs 56 - 52 as there is a positive divergence registered by the RSI on the weekly chart.
• Once the first target of Rs 68 is achieved, partial profit can be booked and the stop loss can be revised to Rs 54 levels for remaining buying positions.
• The time frame for this positional buying call is expected around 45 days.

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