We recommend a buy in the stock of Gujarat State Petronet for a short to medium-term horizon.
It is apparent from the charts of the stock that following an intermediate-term downtrend from it September 2011 peak of Rs 113, the stock found support at Rs 62 in May this year. Since then, the stock has been on a nascent medium-term uptrend.
While trending higher, the stock moved sideways forming an ascending triangle pattern with horizontal line at Rs 75.
Last Thursday, the stock jumped 4 per cent breaking through the horizontal line as well as its 200-day moving average. We also see that there is an increase in volumes over the past three trading sessions.
The daily relative strength index is featuring in the bullish zone and weekly RSI is on the brink of entering this zone from the neutral region.
The daily moving average convergence divergence indicator has signalled a buy and is moving higher in line with the stock price, indicating upward momentum. Both daily and weekly price rate of change indicators are hovering in the positive terrain implying buying interest.
We are bullish on the stock from a short and medium-term perspective. We expect the stock to rally and reach our price target of Rs 81.5 or Rs 83.5 in the near-term with stop-loss at Rs 76.5.
Investors with a medium-term perspective can consider buying the stock with a target of Rs 90 and stop-loss at Rs 73.