The breakout has opened room for the stock to head towards 1700 levels in the next 2-3 months, suggest experts.
The stock moved in a range since July 2023 where 1465 acted as a resistance while on the downside levels above 1000 acted as a strong support on the daily charts.
The stock retested its 50-DMA twice in December 2023 before bouncing back on the daily charts. The stock rose from Rs 1232 on 8th December 2023 to Rs 1517 as on 8th January 2024 which translates into an upside of over 23%.
The stock rose more than 11% in a week. Strong momentum seen in the stock price was also supported by volumes which pushed the stock above July 2023 resistance of 1465 last week. The stock hit a record high of Rs 1580 on 8 January 2024.
In terms of price action, the stock is trading well above most of the crucial short- and long-term moving averages such as 5,10,30,50,100 and 200-DMA on the daily charts.
AgenciesThe daily Relative Strength Index (RSI) is at 77.2. RSI above 70 is considered overbought. This implies that stock may show pullback, Trendlyne data showed. The daily MACD is above its center and signal Line, this is a bullish indicator.
“Olectra is currently displaying robust momentum and is trading near its life high. After initiating a rally from its 52-week low in February 2023, the stock has shown resilience, avoiding significant weaknesses,” Vidnyan S. Sawant, Head of Research at GEPL Capital, said.
“Following a sharp rally, Olectra entered a consolidation phase and is now breaking out of this zone to continue its previous uptrend,” he said.
The breakout was supported by strong volumes, with the last two weeks witnessing volume surges above its 21-week average.
“One notable aspect is Olectra’s consistent support from key moving averages, particularly the 12-week, indicating a reliable mean reversion pattern,” highlights Sawant.
“On the weekly scale, the ADX (Average Directional Index) is quoting at 28, signaling the establishment of a fresh uptrend. This overall structural development reinforces the positive outlook for Olectra’s upward trajectory,” he added.
“Looking ahead, we anticipate further upward movement in prices, targeting the 1724 level. It is recommended to set a stop-loss at 1350 based on closing values,” recommended Sawant.
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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)
