We recommend a buy in the stock of Gujarat Mineral Development Corporation (GMDC) from a short-term perspective. It is apparent from the charts of the stock that after encountering resistance at Rs 220 in late December 2012, the stock started to decline. Since then, the stock has been on a medium-term downtrend. However, presence of significant long-term support in the band between Rs 160 and Rs 165 arrested the stock's decline in March. After taking support, the stock began to trend upwards triggered by positive divergence in the daily relative strength index and price rate of change indicator. On Monday, the stock advanced four per cent experiencing buying interest. With this rally, the daily RSI has entered the neutral region from the bearish zone and weekly RSI is recovering from the oversold area. The daily price rate of change indicator has entered the positive territory from the neutral territory signalling buying interest. Moreover, the daily moving average convergence divergence indicator has signalled a buy. Taking a contrarian view on the stock we are bullish on it from a short term horizon. We anticipate its up move to continue and knock our price target of Rs 179.5 or Rs 183 in the ensuing trading sessions. Trader can consider buying the stock with stop-loss at Rs 169.
Yoganand D.
BL Research Bureau