Balkrishna Industries shares on May 22 rallied 6.6 percent to Rs 2,291, the highest closing level since February 10, and formed a robust bullish candlestick pattern on the daily charts with above-average volumes.
The stock has seen a decisive breakout of downward sloping resistance trendline adjoining highs of February 8 and May 16 this year on the daily charts. Also, there was a symmetrical triangle pattern breakout from the upper trendline on the weekly as well as daily charts, which can be an indication of a new bullish trend.
So far since the lows of March 27, the stock has given a 20 percent return and now it is around Rs 60 away from its recent swing high of Rs 2,350 of February 8. If the stock gets back above this resistance and sustains, then there could be continuation of new uptrend in coming sessions, experts said.
"On the weekly charts, a symmetrical triangle pattern has formed, indicating a potential breakout if the stock manages to sustain above the Rs 2,320-2,350 zone. Symmetrical triangles typically represent consolidation and often serve as a continuation pattern for the existing bullish trend," Viraj Vyas, CMT - Technical & Derivatives Analyst for Institutional Equity at Ashika Stock Broking, said.
He feels a sustained breakout above the zone can potentially trigger the next phase of the bull run in the stock.
There was a golden crossover with 50-day EMA (exponential moving average) beyond the 200-day EMA, and the stock traded well above all key moving averages (50, 100, and 200-day EMA). This was a positive sign.
"Balkrishna Industries has successfully broken out from a downward-sloping trendline, indicating a significant shift in its price trajectory. This breakout is supported by a remarkable surge in trading volume, further strengthening the bullish sentiment," Foram Chheda, CMT, Technical Research Analyst and founder of ChartAnalytics.co.in, said.
Following the stock's decline to a low of Rs 1,908 levels in March, the price experienced a notable recovery, forming higher bottoms. "As the stock price continued to rise, it surpassed several key moving averages. This upward momentum suggests that the stock has the potential to reach levels around Rs 2,330," she said.
However, investors should exercise caution, as a dip below the current day's low of Rs 2,130 could signal a potential exit point for the stock, she advised.
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