Short-term traders can look to buy the stock now for a possible bounce back towards 500 levels in the next 2-3 months, suggest experts.
The stock hit a record high of Rs 583 on 11th September 2023 but it failed to hold on to the momentum. It closed at Rs 482 on 7th December 2023 which translates into a fall of over 17%.
The stock found support above 400 levels in October-November 2023 which also corresponds to the breakout area of consolidation from October 2022-July 2023 on monthly charts.
In terms of price action, the stock is now trading well above crucial short- and long-term moving averages, which suggests that bulls are here to stay.
The stock is trading above 5,10,30,50,100 and 200-DMA on the daily charts which is a positive sign for the bulls.
The daily Relative Strength Index (RSI) is at 59.1. RSI below 30 is oversold and above 70 is considered overbought, Trendlyne data showed. The daily MACD is above its center and signal Line, this is a bullish indicator.
RITES stock seems to be finding support at a key level, which happens to coincide with the previous breakout point and the 9-period monthly moving average.
“This confluence of indicators suggests that there can be a strong level of support at this point and could potentially lead to a rebound in the RITESH stock’s price,” Kapil Shah, Technical Analyst, Emkay Global Financial Services Limited and Trainer at FinLearn Academy, said.
Over the course of 2021, the stock has experienced three significant drops, ranging from 25% to 30%. However, after a recent correction of 25%, the stock has been showing signs of an upside movement.
“The recent low appears to have found support at the role reversal level and moving average, which could indicate that the corrective decline has come to an end and that the stock is poised to resume its upward impulse move,” highlights Shah.
“Looking at the Fibonacci retracement levels, the stock appears to have found support at a level drawn from various swing lows. There was a Fibonacci cluster support around the 440 level, which could have played a role in providing a strong support zone for the stock,” he said.
Additionally, the formation of a strong bull candle suggests that there was significant buying activity at this level, which further indicates respect for the support.
“With the stock entering oversold territory, there may be a good opportunity to buy at a discounted price. The RSI moving above 60 also indicates momentum in the stock’s price. Looking at the daily chart of Rites, it appears to have followed a similar structure,” added Shah.
“Based on this analysis, it may be a good buy opportunity for the stock in the range of 480 to 475 levels. It is recommended to keep a stop loss of 460 on a closing basis. The stock has an upside potential of up to 510/530 levels,” he recommends.
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(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)