Nestle India has lost nearly 4 percent so far in 2019 but things could be turning fast for this FMCG major, going by technical charts. The stock could be heading for a breakout.
It is moving in a strong uptrend by making higher highs higher lows on the weekly chart. The stock has corrected by around 10 percent from its 52-week high of 11,751 recorded on February 8, 2019.
However, the stock took support around the 200-EMA on the daily chart, which also acted as a strong support in the recent past.
“The price is consolidating in a sideways direction from last few days and formed an ‘Inverse Head & Shoulder’ pattern on daily chart. The ‘neckline’ of the said pattern is placed around 11,770 level,” Jay Purohit, Technical & Derivative Analyst at Centrum Broking said in a note.
“We also witnessed similar kind of price pattern in October 2018 and the stock rallied sharply after that. The momentum oscillator ‘RSI’ rebounded from its bullish support zone of 30 levels and showing strength on the daily chart,” he said.
Looking at above technical evidence, Purohit expects a resumption of the uptrend in the counter. Thus, we are advising traders to buy the stock for target of Rs 11,800-12,400. The stop-loss of the trade set-up should be kept at Rs 9,998 for a period of 3 months.
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