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Short-term investors can consider buying the stock of Gati. It is apparent from the charts of the stock that after retracing 61.8 per cent of its earlier up move (from October 2008 low of Rs 26 to its July 2010 peak of Rs 90), it found support around Rs 50 in early February. Subsequently, the stock bounced up this support level triggered by positive divergence in daily and weekly relative strength index (RSI). Gati jumped 7 per cent on March 3, breaking through its short-term downtrend line that was in place from its November 2010 peak of Rs 79. This jump has also helped the stock breach its immediate resistance level of Rs 59. Moreover, there was an increase in daily volume in the past two trading sessions.
The stock is hovering well above its 21- and 50-day moving averages. The daily RSI has entered the bullish zone from the neutral region, and weekly RSI has entered the neutral region. Daily moving-average convergence-divergence indicator has signalled a buy, and is heading towards positive territory.
We are bullish on the stock from a short-term horizon. We expect it to move higher until it hits our price target of Rs 63 or Rs 65 in the upcoming days. Short-term traders can consider buying the stock with a stop-loss at Rs 59.5.
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