Gammon India

We recommend a buy in Gammon India from a short-term trading perspective. It is evident from the charts that the stock’s decline from January peak of Rs 96 was arrested at Rs 50 in early March, which was just above the December 2008 low of Rs 47. However, the stock reversed its trend and has been on medium-term uptrend since March. In early April the stock conclusively penetrated its 50-day moving average and is trading well above this average. After a minor pullback, the stock resumed its medium-term trend by gaining 6 per cent with above average volume on May 6. This recent surge in stock price has reinforced the bullish momentum. The daily relative strength index (RSI) has re-entered the bullish zone from the bearish zone and the weekly RSI is begun to rise in the neutral region. The daily moving average convergence and divergence indicator is featuring in the positive territory. We are bullish on the stock from a short-term horizon. We anticipate the stock’s up move to prolong until it hits our price target of Rs 92. Traders with short-term trading perspective can buy the stock while maintaining a stop-loss at Rs 78.