Technical Analysis


Yoganand D | Updated on October 14, 2018 Published on October 14, 2018

Investors with a medium-term perspective can consider buying the stock of Gujarat Mineral Development Corporation (₹93.8), a major minerals and lignite mining company.

The stock encountered a key resistance at ₹180 in October 2017 and has been on an intermediate-term downtrend since then. It has been forming lower peaks and lower troughs. Medium- as well as short-term trends are also down for the stock. Nevertheless, the stock recently found support after recording a 52-week low at ₹84.3 last week, andbegan to recover from the oversold territory. Moreover, in the Bollinger Bands, the stock touched the lower boundary and subsequently bounced up. On Friday, experiencing buying interest, the stock advanced 6.6 per cent, accompanied by an above-average volume. For the week, the stock surged 7.7 per cent. There has been an increase in weekly volume over the past four weeks. The stock has formed a bullish engulfing candlestick pattern in the weekly chart, which is a bullish reversal pattern.

The recent 6.6 per cent rally has decisively breached the key immediate resistance at ₹90. Moreover, the stock’s upmove from the long-term support at around ₹88 also adds strength to the trend reversal. Taking a contrarian view on the stock, we are bullish from a short- to medium-term perspective.

GMDC has the prospective of trending up and reaching our medium-term price target of ₹102 with a minor pause at around ₹99. Investors with medium-term perspective can consider buying the stock with a stop-loss at ₹89.5 levels.

(This recommendation is based on technical analysis. There is a risk of loss in trading.)

Published on October 14, 2018
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