Investors with medium-term perspective can consider buying the stock of Gitanjali Gems (Rs 342.6). After bottoming out from its lifetime low of Rs 32.5 recorded in March 2009, the stock has been on a long-term uptrend.
In December 2010, the stock took support from this long-term base level at around Rs 175, following a corrective decline from its November 2010 peak of Rs 395.
The stock thereafter resumed its upward journey and has been on an intermediate-term uptrend since then. Last week, the stock advanced almost 8 per cent emphatically breaking through its key resistance at around Rs 313 which it was testing for past one-and-a-half months. We observe that there is an increase in weekly volumes in the past two weeks.
The stock is hovering well above its 50- and 200-day moving averages. Both daily and weekly relative strength index are featuring in the bullish zone.
Further, daily as well as weekly moving average convergence-divergence indicators are hovering in the positive territory implying upward momentum.
The stock's long and intermediate-term uptrend lines are in tact.
Our medium-term forecast on the stock is bullish.
We believe that Gitanjali Gems has the potential to trend northwards and reach our medium-term price target of Rs 400, following a minor sideways movement of around Rs 375. Investors with a medium-term perspective can consider buying the stock with stop-loss at Rs 313 levels.
Follow up — TVS Motor
Company (Rs 60.6)
The stock rose 5.6 per cent in the previous week, in line with our expectation. We reiterate our medium-term bullish forecast on the stock with price target and stop-loss mentioned last week.
(This recommendation is based on technical analysis. There is a risk of loss in trading.)