Technical Analysis

Gujarat Pipavav Port (₹102.6): Buy

Yoganand D | Updated on December 16, 2018 Published on December 16, 2018


The stock of Gujarat Pipavav Port gained 6.7 per cent last week, decisively surpassing a key immediate resistance at ₹98 and its 50-day moving average. Since encountering resistance at ₹262 in early 2015, the stock has been on a long-term downtrend.

Medium-term trend is also down for the stock. But it found support after recording a 52-week low at ₹90 in the first week of December 2018, and bounced back. Subsequently, the stock changed direction and began to trend upwards, triggered by positive divergence in the daily price rate of change indicator and moving average convergence divergence indicator.

Recently, the stock surged, breaking above its near-term resistance, showing initial signs of bullish momentum. It breached its 21- and 50-day moving averages and trades well above them.

Moreover, the weekly relative strength index and price rate of change also display positive divergence, backing the trend reversal. The daily and weekly price rate of change indicators feature in the positive terrain, implying buying interest. The weekly RSI has entered the neutral region from the bearish zone.

Following a sharp rally last week, the stock formed a flag pattern, which is a bullish continuation pattern. A strong break above the immediate resistance of ₹103 will confirm the pattern and take the stock up in the ensuing weeks. The price targets are ₹112 and ₹120. Investors with medium-term outlook can buy the stock of Gujarat Pipavav Port with a stop-loss at ₹94 levels.

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

Published on December 16, 2018
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