Short-term traders can look to buy the stock now for a target of Rs 590 in the next 3 months, suggest experts.
The stock rallied more than 20% in the last 3 months which helped Granules India stock to hit a fresh record high of Rs 480 26th February 2024. However, it witnessed some profit-taking thereafter.
The stock witnessed a rounding bottom breakout on the monthly charts earlier in February 2024. The stock drifted lower after hitting a high of Rs 438 in December 2020.
The pharma stock found support above 200 levels in May and June 2022 before it reversed losses. The stock found momentum after a breakout from a rounding bottom formation which has appeared multiple times since 2010.
“Granules India, a small-cap company, is currently trading at its highest recorded level and has recently experienced an upward breakout of the rounding pattern, a recognized trend continuation chart pattern,” Suraj Bathija, Founder & CSO at AlgoBulls, said.“This pattern has recurred several times since 2010, suggesting a continuation of the same trend. Notably, the monthly, weekly, and daily RSI indicators are all above the 60 level, indicating a clear uptrend,” he said.
In terms of price action, the stock is trading above short- and long-term moving averages on the daily charts, which is a positive sign for the bulls.
The daily Relative Strength Index (RSI) is placed at 70.7. RSI above 70 is considered overbought. This implies that stock may show a pullback.
The daily MACD is above its center and signal Line, this is a bullish indicator.
“The daily RSI has remained consistently above 50 since November 2023, signaling strong momentum in the stock,” highlights Bathija.
“Analysis of trading volume reveals that during price increases, the volume of green candles surpasses that of red candles, indicating active buying by investors and a willingness to further propel the uptrend,” he added.
Additionally, historical data suggests that when Granules India forms a rounding pattern followed by an upward breakout, the stock tends to reach new highs.
“Technical and fundamental analyses concurrently support the prevailing trend, enhancing conviction. With the current price at 460, the stock is anticipated to continue its upward trajectory towards 590, with a suggested stop loss at 418 in the coming quarter,” recommended Bathija.
(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)
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