sensex stock: chart check: a breakout of this Sensex stock’s 4-month range can take it to new 52-week highs; time to buy?

India Ltd, part of the S&P BSE Sensex index, is up more than 1% in the past five sessions and more than 11% in one month, triggering a breakout of a 4-month consolidation range.

The auto stock had been trading in a wide 1,100-point range since February, where Rs 8,300 acted as crucial resistance, while on the downside, Rs 7,200 acted as strong support.

The stock finally experienced a breakout of this range in July 2022, which is a bullish sign, and the momentum may carry it towards Rs 9,250, surpassing its current 52-week high of Rs 9,022 recorded on February 10, 2022.

The automotive and automotive auxiliary space extended its outperformance as the Nifty Auto index is poised to surpass its multi-year highs since CY17.

“In the large-cap automotive space, we remain positive on Maruti Suzuki. The stock remained resilient during the recent correction and is experiencing a breakout after four months of consolidation, signaling renewed upside and a new entry opportunity said Dharmesh Shah, Technical Manager, ICICI Direct in a note.

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On the price front, the stock is now above the 50-WMA short-term moving average on the weekly charts, which is a positive sign. It now mostly trades the crucial short-term and long-term moving averages of 5, 10, 30, 50, 100, and 200-DMA.

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On the weekly charts, the stock has managed to hold above its 52-week EMA since August 2020 and formed a higher low, suggesting inherent strength in high buying demand.

“We expect the stock to extend the current rise and head towards the Rs 9,250 levels in the coming months as this is the measuring implication of a breakout of the four-month range. (Rs 8300-7200=1100) added to Rs 8300,” he said.

The weekly RSI recently generated a buy signal moving above its nine-period average. So that validates the positive bias, Shah says.

He recommends investors to go long for a target of Rs 9,250 and a stop loss of Rs 7,740 in the next 2-3 months. The recommended range to buy the stock is down towards the Rs 8,350-8,510 levels.

(Disclaimer: The recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)

Karen J. Nelson