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Investors with a medium-term perspective can buy the stock of Godawari Power & Ispat at the current levels.
The stock has been in a bullish momentum over the past one week, after decisively breaking a key resistance at ₹170 last Monday.
Following a long-term downtrend, the stock recorded a 52-week low at ₹120 in late August. Subsequently, it started to consolidate sideways in a wide range between ₹130 and ₹170 over the past four months.
Last week, the stock broke out of this sideways movement on the upside and skyrocketed 32 per cent. There has been an increase in the daily volume over the past five trading sessions.
While trending up, the stock breached its 200-day moving average, and trades well above this average. Moreover, it has surpassed another key resistance at ₹200, by gaining 6 per cent on Friday.
The daily relative strength index (RSI) has reached the overbought territory’, implying that a near-term corrective decline can’t be ruled out at this juncture. Investors can make use of the corrective decline to buy the stock.
The weekly RSI has just entered the bullish zone. Also, the daily and the weekly price rate of change indicators are hovering in the positive terrain, indicating buying interest.
Though the medium-term outlook is bullish, the near-term correction is likely.
Hence, investors can buy the stock in declines with a deep stop-loss at ₹189.
Targets are ₹250 and ₹260.
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