The stock fell more than 30% from its listing day high. LIC listed on bourses on 17th May 2022 and made a high of Rs 920. The stock closed at Rs 622 on 18th July 2023 which translates into a fall of nearly 33%.
However, the stock picked up pace in the last few months. It rose marginally in the last month but saw a 14% jump in the last 3 months.
The life insurance player is trading above the neckline of the falling trendline breakout which was placed at Rs 617 and the inverse Head and Shoulder pattern was placed around Rs 620. The stock closed at Rs 622 on 18th July 2023.
The stock is trading above both the breakout levels which happened in June 2023.
An inverse head & shoulder pattern is the mirror image of the head and shoulder pattern and is a bullish signal.
It is defined as three bottoms with the middle bottom (head – marked as H) significantly lower than the other two bottoms (left and right shoulders – marked as S). Also Read
In terms of price action, 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 placed at 54.9. RSI below 30 is oversold and above 70 is considered overbought, Trendlyne data showed.
LIC is trading in a lower top, and lower bottom formation since its IPO. During listing, prices made a high of around Rs 918 on the NSE, stock prices corrected 42% and made a bottom near Rs 530.
“Since March 2023 we are seeing prices have started moving up in a higher top higher bottom pattern and registered a 23% gain in the last 3 months. At the current juncture, we can see a bullish price pattern breakout with bullish divergence visible on the chart,” Kiran Jani CIRA, Head of Technical Research at Jainam Broking, said.
“The price has formed an inverted head and shoulder pattern and falling trendline breakout which is intact since IPO. And within that we are seeing trading above its 200 SMA after a long time,” he said.
“The breakout from the falling trendline came above Rs 600. Recently price has re-tested its falling trendline and its 200 SMA. Looking at the relative strength index (RSI-14) shows the multiple bullish divergences,” highlights Jani.
“Considering the current chart pattern, we are expecting prices to touch Rs 720 in the short term if prices hold above Rs 570 level,” he recommends.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)