Short-term traders can look to buy the stock now or on dips for a possible target above 3600 levels in the short to medium term, suggest experts.
Asian Paints which is also part of the S&P BSE Sensex index, hit a 52-week high of Rs 3566 on 24th July 2023 but it failed to hold on to the momentum. The stock took support above 2900 levels in September 2023 and bounced back.
The stock has been gaining momentum after forming a strong base above 2900 levels in September and October. It has rallied more than 10% since then.
The Supertrend indicator also triggered a buy earlier in December on the weekly charts. The stock is also trading above critical moving averages on the daily and weekly charts which is a positive sign for the bulls.
“Asian Paints stock is exhibiting a robust trend as it surpasses the 61.80% Fibonacci ratio of the previous downward move from July 28, 2023, to November 3, 2023, indicating a potential continuation of the rising trend,” Vidnyan S. Sawant, Head Research at GEPL Capital, said.
“The stock is trading above critical moving averages, including the 12-week and 26-week EMAs, aligning with a bullish trend. The positive crossover of the MACD indicator near the zero line further reinforces the momentum for an upper trajectory,” he said.
In terms of price action, the stock is trading well above most of the crucial short- and long-term moving averages on the daily charts such as 5,10,30,50,100, and 200-DMA.
The daily Relative Strength Index (RSI) is placed at 70.5. 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.
“Analyzing the ratio chart against NIFTY underscores sustained outperformance, with the ratio line reversing from the demand zone established since 2021. This highlights the stock’s relative strength compared to the broader market,” highlighted Sawant.
“We anticipate further upward movement in prices, with a target set at 3676. It’s crucial to set a stop-loss at 3175, strictly based on closing prices, to manage risk effectively,” 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)