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We recommend a buy in Gujarat Alkalies & Chemicals from a short-term perspective. The charts of the company shows that it has been on a medium-term uptrend from its March 2008 trough of Rs 131. During this up move, the stock met with a resistance at around Rs 200 in mid April and witnessed a corrective decline, which retraced 38.2 per cent fibonacci retracement level of the prior up move and found support at Rs 175 levels. Subsequently, the stock bounced off from that support level and appears to have resumed the medium-term uptrend. The stock is currently trading well above its 50- and 200-day moving averages. The daily momentum indicator of the stock is on the brink of entering the bullish zone. Moving average convergence and divergence is featuring in the positive territory, in line with the stock’s price action. Considering the intactness of the medium-term up trendline, we are bullish on the stock in the short-term. We expect the stock to rally until it hits our price target of Rs 213 in the short-term. Traders with short-term perspective can buy the stock while keeping the stop-loss at Rs 178.

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