, part of the casting & forging industry, has more than doubled from its June 2022 lows and a breakout from an inverse head and shoulder pattern could well push the stock to fresh record highs in the next 3-4 months, suggests experts.
The stock hit a 52-week low of Rs 50.10 on 20 June 2022. It closed at Rs 112 on 3 January 2023 which translates into an upside of over 120%.
The momentum helped the stock to hit a fresh record high of Rs 120 on 20 December 2022. The recent drop makes this smallcap an attractive buy as it is still trading above the neckline of the inverse head and shoulder pattern placed at around Rs 100.
The auto ancillary space has seen some exceptional outperformance with many stocks breaking out of multi-year consolidation signalling the resumption of the structural uptrend.
In terms of price action, the stock price is trading above most of the crucial short and long-term moving averages of 5,10,30,50,100, and 200-DMA which is a positive sign for the bulls.
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The Relative Strength Index (RSI) is 61.4, RSI below 30 is considered oversold and above 70 is considered overbought, Trendlyne data showed.
“Within the pack, Nelcast has witnessed a strong breakout above its CY17 highs in December 2022 backed by a spurt in volumes indicating resumption of the primary uptrend,” ICICIdirect said in a note.
“Key observation has been that share price has given a faster retracement of August 2021–June 2022 decline (Rs 100-50) faster signalling a structural turnaround and is expected to outperform in coming months. Consolidation of past five years (CY17-22) resembles a bullish cup and handle pattern,” he said.
More interestingly, December 2022 volumes at the time of breakout are the highest in the past decade validating the increasing participation and corroborates the longevity of the uptrend
“We expect the share price to head towards Rs 126 in the next few months as it is a 123.6% retracement of the most recent decline (Rs 119-92). The retest of breakout level of Rs 92 in December and strong bounce back in last few sessions makes trend stronger with key support now at 92 levels,” recommended the report.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
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