The stock price of Ashok Leyland has slid from Rs 105 to Rs 69 and is making an attempt to break out of the downtrend. One attempt was made earlier in June, when the scrip moved up from Rs 69 to Rs 76. In the process, it broke the resistance line. However, it soon fell back.

This pattern has been repeated a few times in its downtrend from Rs 90. But what makes the current attempt to break out unique is that the scrip has slipped to near its bottom at Rs 69. This is the second time the scrip will test out the bottom, if it falls back. The bottom having been tested once should give the investor some degree of confidence.

The scrip should attract long-term buyers as Ashok Leyland is seen to be different from Telco. Ashok Leyland sets its own leisurely pace, unmindful of what other players do — it has its own strengths and its own plans.

In such a scenario, long-term investors should find it worthwhile to start accumulating the scrip gradually. A recovery to the level of Rs 85 would translate into a 20 per cent return. And if this happens before the next 12 months, the annual return could be much higher. Even short-term players may find it worthwhile to consider some fund parking here.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.