We recommend a buy in Gammon India from a short-term perspective. From the charts of Gammon India, we notice that its intermediate-term downtrend, which began in early January from a high of Rs 845 had come to an end in early August, with the 52-week low of Rs 199. However, the stock reversed direction triggered by prolonged positive divergence in the daily relative strength index (RSI).

The stock has been trending upward since this trough. It also crossed over 21-day moving average recently. We observe that there is an increase in volume over the past three trading sessions. The daily RSI is on the brink of entering the bullish zone. The weekly RSI has recovered from the oversold territory.

The moving average convergence and divergence is rising in line with the stock. We are bullish on the stock in the short-term. We anticipate the stock’s up move to prolong until it hits our price target of Rs 270 in the forthcoming trading sessions. Traders with short-term perspective can initiate buy in the stock, while maintaining a stop-loss at Rs 233.

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