General Insurance Corporation of India was the biggest gainer in the Nifty500 index, rising 18 percent to end at an over three-month high on May 4. The stock has formed robust bullish candlestick pattern on the daily timeframe with significantly higher volumes.
After forming Bullish Engulfing kind of pattern on March 29, the stock has largely been in an uptrend. For last couple of weeks, it has maintained above all key moving averages (50, 100, 200 EMA - exponential moving average as well as 200-day simple moving average), which indicated the trend is positive.
On the weekly scale, momentum indicator MACD (moving average convergence divergence) has also given a positive crossover above zero line, while on the daily charts, RSI (relative strength index 14) at 83 levels looked bullish but reached in the overbought zone.
Hence, experts expect the next swing high around Rs 200 to be a crucial hurdle for the stock of General Insurance Corporation and crossing the same can open doors for further rally, while the today's low of Rs 154 can act as a near term support.
The stock closed at Rs 182, the highest closing level since January 31 this year, up 17.72 percent on the NSE. The trading volume at 2.3 crore shares on the NSE was far higher than previous day's volume.
"Although the stock is up by over 17 percent and has strong momentum but on the upside Rs 200 zone might be a tough nut to crack. There is a placement of falling trend line near that zone and also the 78.6 percent retracement of the previous fall coincides there," Mehul Kothari, Head of Technical Research at Anand Rathi, said.
Thus he advised traders who hold longs can book profits near this zone.
"Once the stock starts trading above Rs 200 then the upper target of Rs 220 -240 can be seen, whereas on the downside, positional support is now at Rs 160," Mehul said.
On the weekly charts, the stock maintained its higher top, higher bottom formation indicating positive undertone of the stock.
"In today's session the stock has formed big bullish candle with huge volume confirmation. The stock has important resistance placed at Rs 191 followed by Rs 205 and Rs 225, and on the other side it has strong support placed at Rs 168 below that Rs 153 levels," Vidnyan Sawant, AVP - Technical Research at GEPL Capital said.
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