Saregama India shares rallied as much as 15.3 percent intraday on March 21, but lost half of its gains due to profit booking in later part of the session. The stock settled 7.5 percent higher at Rs 344.45, the highest closing level since February 10 on the NSE, which overall seems to be technical rebound after bullish divergence.
The bullish divergence still exists in the stock with price making lower lows and RSI making equal lows during January 24 and March 15, but that is generally a weak bullish divergence. So, further sharp uptrend possible only if the stock decisively closes above Rs 360 and beyond the same, 200-day EMA (exponential moving average) which coincides with Tuesday's high of Rs 369.5 can be the next target, experts said.
Saregama India has formed bullish candlestick pattern on the daily charts with long upper shadow indicating profit booking at higher levels. Also the stock has broken the upper threshold of channel by small margin, hence holding above the same may raise possibility of further upside.
The trading volumes on Tuesday was highest in last two years on daily basis.
Saregama marked a high at Rs 550, formed a lower high near Rs 509 in April 2022, and slipped in a corrective downtrend. While staying in a declining trajectory, the stock trades below the 50-, 100-, and 200-day MA. The stock has made a strong attempt to put a potential bottom in place by trying to rebound with exponential volumes, Foram Chheda, Technical Research Analyst and Founder of ChartAnalytics.co.in said.
She feels the bullish divergence seen on the RSI (relative strength index) has increased the chances of a possible technical rebound.
"A close above 360 can open up some more room on the upside. However, any decline below Rs 306 will keep the current downtrend unchanged and add some more weakness to the stock," Foram said.
The stock has given strong up move since March 2020 from Rs 18 to Rs 550 levels in January 2022. After that the stock has started correcting till Rs 300 levels which is approximately 50 percent Fibonacci retracement level of previous advance.
"Tuesday's upmove witnessed huge volume breakout indicating strong participation in this positive move. Now Tuesday's low (Rs 320.50) will act as a important support for the stock," Vidnyan Sawant, AVP - Technical Research at GEPL Capital said.
One can buy or hold the stock for the potential upside towards Rs 370 & Rs 395 levels and put strict stop-loss of Rs 320 on the closing basis, he advised.
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