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We recommend a buy in the stock of Great Offshore from a short-term perspective. It is evident from the charts of the stock that after meeting resistance at Rs 140 in mid-February, it started to decline. Since then, the stock has been on a medium-term downtrend. However, its significant base in the band between Rs 70 and Rs 75 provided support for the stock in mid-May this year. The stock has been moving sideways for almost a month above the aforesaid base zone with an upward bias.
The daily relative strength index and moving average convergence divergence indicator are displaying positive divergence signalling trend reversal. On Wednesday, the stock zoomed 4.4 per cent breaching its 21-day moving average. We notice that there is an increase in volumes over the past four trading sessions. The daily RSI is inching higher in the neutral region towards the bullish zone. The daily MACD has signalled a buy and is moving higher in line with the stock price. Moreover, the daily price rate of change indicator has re-entered the positive terrain implying buying interest.
Taking a contrarian stance on the stock, we are bullish on it from a short-term perspective. We expect its up-move to prolong and reach our price target of Rs 84 or Rs 87 in the approaching trading sessions. Traders with short-term perspective can consider buying the stock with stop-loss at Rs 79.
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