Today's Pick - GMDC

We recommend a sell in Gujarat Mineral Development Corporation from a short-term perspective. From the charts of Gujarat Mineral Development Corporation, we observe that it has been on a long-term downtrend since its November 2007 peak.

The down move accelerated in March 2008 and the stock penetrated its 200-day moving average during this decline. The stock has been testing the key support level at Rs 240 over the last two weeks. On July 16, the stock conclusively broke through this support level and closed 6 per cent lower.

The daily and weekly relative strength indices have entered into the bearish zone from the neutral region. The stock is trading well-below it 21- and 50-day moving averages. The long-term down trendline of the stock is still in place.

Considering the above negative factors, we are bearish on the stock in the short-term horizon. We expect the stock’s decline to prolong until it hits our price target of Rs 198 in the approaching trading sessions. Traders with short-term perspective can sell the stock, while maintaining stop-loss at Rs 234.

via BL