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We recommend a buy in the stock of Godawari Power and Ispat from a short-term perspective. It is seen from the charts of the stock that since bottoming out at its 52-week low of Rs 69.9 in December 2011, it has been on an intermediate-term uptrend.
However, after encountering a resistance around Rs 130 in late April this year, the stock witnessed a corrective short-term decline and found support at Rs 106. The stock has been moving sideways for the past five weeks with an upward bias.
On Monday, the stock breached its 200-day moving average by gaining 2.5 per cent, with above average volumes. Both the daily and weekly relative strength indices are inching higher from the neutral region towards the bullish zone. The daily moving average convergence divergence indicator has signalled a buy and is on the brink of entering the positive territory from the negative terrain.
We are bullish on the stock from a short-term perspective. We expect its up-move to continue and reach our price target of Rs 120 or Rs 124 in the forthcoming trading sessions. Traders with a short-term perspective can consider buying the stock with stop-loss at Rs 113.5.
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