Shares of RITES climbed over 5 percent to a six-month high on March 9 and became the fourth-largest gainer in the Nifty500 index.
The stock has formed long bullish candlestick pattern on the daily charts, with above-average volumes and made a higher-high-higher-low formation.
With Thursday's rally, the Bollinger band has seen expansion on the higher side, indicating that the stock may be in momentum since the beginning of this month.
The momentum got strengthened further when the stock broke out of the downward sloping resistance trendline adjoining the highs of November 4 last year and February 1 this year. The same breakout was also seen on a weekly basis and the stock continued with the formation of a bullish candlestick pattern on the weekly scale.
Experts expect the stock to surpass the Rs 400 level soon and advised accumulating and holding it for higher targets. The stock was trading at Rs 370, up 5.5 percent on the NSE at 2:20pm.
"The stock is currently trading at a three-month high after a CIP (change in polarity) formation near Rs 330 levels, indicating strong positive undertone," Vidnyan Sawant, AVP - Technical Research at GEPL Capital, said.
On the weekly charts, he feels the stock has given a consolidation breakout in September 2022 with volume confirmation and retested that level in December 2022 and February 2023 and bounced back which shows a strong base has been formed near the Rs 300-330 zone for the medium to long term.
Momentum indicators like RSI (relative strength index) sustaining above 60 on the weekly scale indicating strong positive momentum of the stock.
One can accumulate or hold the stock for the upside potential for Rs 430 - 485 and stop-loss should be placed at Rs 330 levels on the closing basis, Vidnyan advised.
"After forming a double bottom near Rs 305-307 levels which coincided with 200-day MA (moving average), the stock price witnessed a rebound towards the upper side of the consolidated range. And currently, it is attempting to break out from the defined pattern. This price move is accompanied by an increase in volume which adds bullish implications," said Foram Chheda, a technical research analyst and founder of ChartAnalytics.co.in.
While breaking out from this pattern, the stock price is trying to cross the 100-day MA (Rs 354) as well. This indicates that the underlying trend remains bullish.
"Price attempting to break out from the consolidation pattern, increase in volume and price crossing above 100-day MA invites buying opportunity and lays the ground for a potential up-move by close to 9.5 percent. Any price move below Rs 344 can be considered to move out of the stock," Foram advised.
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