We recommend a buy in the stock of Graphite India from a short-term perspective. It is seen from the charts of the stock that after retracing to Fibonacci retracement level of 50 per cent of its prior up move, it found support around Rs 65 in December 2011. This level is also a significant long-term base level.
The stock, thereafter, started to move higher triggered by prolonged positive divergence in daily moving average convergence divergence indicator and weekly relative strength index. On Thursday, the stock emphatically broke through its medium-term downtrend-line by surging 6.7 per cent with good volume. This up move has also breached its 21- and 50-day moving averages decisively.
The daily RSI has entered into the bullish zone and weekly RSI has entered into the neutral region from the bearish zone. After signalling a buy, the daily MACD is on the brink of entering into the positive terrain. Both daily and weekly price rate of change indicators are featuring in the positive area indicating buying interest.
Our short-term outlook on the stock is bullish. We anticipate it to move higher and reach our price target of Rs 78.5 or Rs 81 in the approaching trading sessions. Traders with short-term perspective can consider buying the stock with stop-loss at Rs 73.5.
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