We recommend a buy in the stock of Gujarat State Petronet Ltd (GSPL) from a short-term perspective. It is apparent from the charts of the stock that it has been on a medium-term downtrend since encountering resistance at Rs 81 in January 2013. The short-term trend is also down for the stock. However, after taking support at around Rs 50 last week, the stock changed direction triggered by positive divergence in the daily relative strength index. On Friday, the stock jumped 8 per cent accompanied by above average volume breaching its short-term down trendline and 21-day moving average. The daily RSI has entered the neutral region from the bearish zone and weekly RSI is on the brink of entering the neutral region from the bearish zone. The daily price rate of change indicator has entered the positive terrain from the negative, indicating buying interest. The daily moving average convergence divergence indicator has signalled a buy. Taking a contrarian stance on the stock, we are bullish on it from a short-term perspective.
(Note: The recommendations are based on technical analysis. There is a risk of loss in trading.)
Keywords: Gujarat State Petronet stock technicals