Chart Focus: Gulf Oil Lubricants India (₹798.5): Buy

Investors with a medium-term perspective can buy the stock of Gulf Oil Lubricants India at current levels. The stock encountered a key resistance at around ₹1,095 in early February 2018 and began to decline. Since then, it has been on an intermediate-term downtrend. However, the stock found support at the long-term base level of ₹700 in late October this year.

Triggered by positive divergence in the daily relative strength index and daily price rate of change indicator, the stock reversed direction in late October. It has been on a budding short-term uptrend since then. While trending up, the stock surpassed its 21- and 50-day moving averages and trades well above them.

After testing a key resistance at ₹780 for few weeks, the stock conclusively breached this level on Friday, gaining 4 per cent. This rally has strengthened the short-term uptrend. The daily relative strength index has entered the bullish zone from the neutral region and the weekly RSI feature in the neutral region with an upward bias.

The daily price rate of change indicator continues to hover in the positive terrain and its weekly indicator is entering the positive area, implies evolving buying interest. The medium-term outlook is bullish for Gulf Oil Lubricants. The stock has the potential to extend its on-going uptrend and reach the price targets of ₹900 and ₹950 with a minor pause at around ₹850. Investors with a medium-term perspective can buy the stock with a stop-loss at ₹744 levels.

(This recommendation is based on technical analysis. There is a risk of loss in trading)

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