We recommend a buy in the stock of Gujarat Fluorochemicals from a short-term perspective. It is seen from the charts of the stock that it has been on a long-term uptrend from its February low of Rs 50, forming higher peaks and troughs. The stock found a base at its longer-term significant support around Rs 170 in late-November 2010 and bounced higher. Since then, it has been on a steady medium-term uptrend, backed with good volumes in the advancing days.
On January 12, the stock emphatically broke through a key resistance (August and September 2010 peaks) by jumping 7 per cent. We notice that there has been an increase in volumes over the past three trading sessions. The stock is trading well above its 21- and 50-day moving averages. Both the daily and weekly relative strength indices feature in the bullish zone. The monthly RSI has also entered this zone after three years. Moreover, the daily as well as the weekly moving average convergence-divergence oscillators are hovering in the positive territory implying upward momentum. Our short-term outlook on the stock is bullish. We expect its ongoing upmove to prolong until it reaches our price target of Rs 252.5 or Rs 260 in the forthcoming trading session. Traders with a short-term perspective can consider buying the stock with stop-loss at Rs 237.