A range breakout on the weekly charts can push the Polycab India Ltd stock higher by about 20 per cent, suggest experts. This upside is despite over 120 per cent rally in this equipment in the last year compared to 21 per cent upside seen in the Nifty50 in the same period.

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The electric equipment producer which is also in India’s top 200 firms has a market capitalization of more than Rs 40,000 cr hit a fresh 52-week high of Rs 2770 on 18 January 2022.
 

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Polycab is engaged in the business of manufacturing and selling wires and cables and fast-moving electrical goods ‘FMEG’ under the ‘Polycab’ brand.

Apart from wires and cables, company manufacture and sell FMEG products such as electric fans, LED lighting and luminaires, switches and switchgear, solar products, and conduits & accessories, said the company website.

The stock has rallied by about 10 per cent so far in January and over 16 per cent in the last 1 month. The recent price action helped the stock to break out of a trading range on weekly charts.

Polycab has been moving in a tight range of 500 points where 2640 remains to be at the top end while 2100 provided support since September. The breakout in January was accompanied by volume which suggests that the momentum is here to stay.

From a shareholding perspective, foreign investors increased holding from 6.5 per cent in the September quarter to 6.89 per cent in the December quarter. Mutual funds also raised stakes from 7.8 per cent in the September quarter to 7.95 per cent in the December quarter, data from Trendlyne showed.

 

Technically, the stock is trading well above the short and long term moving averages of 30,50,100 and 200-DMA which is a positive sign for bulls.

“The stock price started its up move from 624 (May 2020) to 2647 (Oct 21), making series of higher bottoms. Super Trend is in Positive mode since Sept 2020,” Bharat Gala, President - Technical Research, Ventura Securities Ltd, said.

“From July to Dec 21 the stock traded in the range of 2100 to 2600 Price Zone. Recently the stock made a new Weekly high at 2759 giving Range breakouts accompanied by supportive volumes,” he said.

The KST, ROC & ADX Indicators suggest a possible firm Uptrend. The stock is trading above all averages since Aug 2020.

“The possible targets are 3200-3700-4200. If the stock price corrects downwards the buy levels are (2615-2525)-2450-(2380-2338). A Stop Loss to be observed in the trade is 2200,” added Gala.

(Disclaimer: The views/suggestions/advices expressed here in this article is solely by investment experts. Zee Business suggests its readers to consult with their investment advisers before making any financial decision.)