Saturday, July 16, 2011

Gitanjali Gems - Buy

We recommend a buy in the stock of Gitanjali Gems from a short-term perspective. It is seen from the charts of the stock that since bottoming out in December 2010 around Rs 160, it has been on an intermediate-term uptrend forming higher peaks and troughs. In early April, the stock conclusively broke out of a significant resistance at Rs 300.

However, following a minor correction in the form of narrow sideways movement, the stock penetrated its upper boundary by gaining three per cent with good volume on May 25. Reinforcing the bullish momentum, the stock has breached its 21-day moving average. It is trading well above its 50- and 200-day moving averages. The 14-day relative strength index has entered into the bullish zone from the neutral region and weekly RSI is on the brink of entering in to this zone. Both daily and weekly moving average convergence divergence indicators are hovering in the positive territory signalling upward momentum.

Daily price rate of change indicator entering in to the positive terrain shows that buying interest has emerged in the stock. We are bullish on the stock from a short-term horizon. We anticipate it to move higher until it touches our price target of Rs 278 or Rs 289 in the days ahead. Short-term traders can buy the stock with stop-loss at Rs 264.5.

The scrip has given great returns over a 1 year period horizon and is likely to outperform its peers.

Time Span Price Change %Change
Today 304.80 -8.40 -2.68
Week 296.00 17.20 5.81
Month 297.85 15.35 5.15
Three Months 273.85 39.35 14.36
Six Months 182.85 130.35 71.28
One Year 154.95 158.25 102.12

The Company has taken the right steps and the business is poised for a giant leap forward. We strongly recommend investors to buy this scrip and add on all declines for a 35-40% returns for next 6 months.


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Ingenious Investor
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