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The stock of Graphite India had gained 9 per cent on Friday to close at ₹320, extending its weekly gain to almost 17 per cent. This rally provides investors with a medium-term perspective an opportunity to buy the stock at current levels. Also, investors with a contrarian view can buy. Since recording a new high at ₹1,126 in August 2018, the stock has been in a long-term downtrend, forming lower peaks and troughs. Medium as well as short-term trends are also down. But the stock found support, registering a 52-week low at ₹255 last week and reversed direction, triggered by positive divergence in the daily relative strength index. Besides, the weekly RSI is also displaying positive divergence, backing the trend reversal. For the past one week, the stock has been trending up.
On Friday, it decisively breached key resistance and 21-day moving average at ₹300, showing initial bullish signs. There has been an increase in daily volume over the past five trading sessions. Further, the daily price rate of change indicator has also displayed positive divergence, backing the trend reversal, and the indicator has entered the positive terrain, implying buying interest. Taking a contrarian stance, the medium-term outlook appears bullish for Graphite India. It can extend the up-move and reach the price targets of ₹350 and ₹370 in the medium term, with a minor pause at around ₹350. Traders with a medium-term view can buy the stock with a stop-loss at ₹295.
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