DVR, part of Tata Group, has fallen more than 20 per cent from its November 2021 highs effectively placing the stock in bear grip, but the chart pattern suggests that bulls are taking control at least in the short term.
After hitting a 52-week high of Rs 298 on 17 November 2021, the stock failed to hold on to the momentum. It closed at Rs 228 on 18 July 2022 which translates into a downside of over 23 per cent.
But the recent breakout from a falling trendline on the weekly charts as well as other technical indicators points towards a bullish outlook at least in the near term, suggest experts.
The stock gave a breakout above Rs 210 level on the weekly charts and also managed to close above the 50-WMA which is a positive sign for the bulls.
The stock has rallied by about 20 per cent in a month and over 50 per cent in the last year which hints at a strong momentum.
The Relative Strength Index (RSI) is placed at 69.1. RSI below 30 is considered oversold and above 70 is considered overbought, Trendlyne data showed. MACD is above its center and signal Line, this is a bullish indicator.
On the price front, Tata Motors DVR is trading below the 5-DMA as well as 200-DMA but above 10,20,30,50, and 100-DMA.
The stock price started its up move from Rs 55 (Nov 2020) to Rs 298.5 (November 21), making a series of higher tops and higher bottoms, supported by volumes.
“During the move, the stock continuously traded above averages. Thereafter, the stock entered the profit booking zone making lower tops but always found support along Rs 180 level and bounced back,” Bharat Gala, President – Technical Research,
“Recently the stock has given a pattern breakout and made a series of two positive weekly candles. The rise from November 2020 to November 2021 had a valid correction till June 2022 and the stock found continuous support at Rs 180 level and initiated a pattern breakout recently,” he said.
The Demand Index, PVT, ADX & KST Indicators indicate buying strength in the stock
The PVT indicator or the price volume trend indicator is a momentum-based indicator used to measure money flow. A Demand Index is used to measure the ratio of buying pressure to selling pressure.
ADX or average directional index is a trend indicator while KST or Know Sure Thing is a momentum oscillator that is used to interpret rate-of-change price data.
“The possible targets are Rs 325-400-450. If the stock price corrects downwards the buy levels are Rs 217-210-205-199-195. A stop loss to be observed in the trade is Rs 160,” recommends Gala.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)