Shares of financial services Motilal Oswal Financial Services Ltd has been on a stellar run in 2021, giving its shareholders a whopping 70 percent return on their investment in just over six months. The stock has outperformed headliner Nifty50 which rose 13 percent and BSE200 that surged 16 percent in the same period. However, on a 1-year basis, the stock is trailing behind BSE200.
Despite the recent run-up in prices, Motilal Oswal looks like a buy on technical charts after it registered a breakout from the Triangular pattern. Experts suggest the breakout reassures the stronghold of bulls, which could now take the stock prices towards Rs 1360-1610 levels, in the next 5-6 months. This translates into an upside of 38-60% from the July 9 closing level of Rs 986.
A triangular pattern breakout is formed when the price action narrows over several price swings. If trend lines are drawn along the highs and lows of the price action, the trend lines converge towards each other. This creates the appearance of the triangle.
Ascending triangles are a bullish formation that projects an upside breakout. An ascending triangle occurs when the lower trend line is rising while the upper trend line is horizontal, suggest experts.
“On the weekly chart, it is evident that downtrend which started from Jan 2018 seems to have completed now as prices have broken out of Triangle pattern marked with a-b-c-d-e and simultaneously it is also trading above the downward sloping trend line,” Jignesh Pandya, Sr. Research Analyst at Monarch Networth Capital Limited said.
Breakout has been accompanied by a strong increase in volumes. Also, momentum Oscillator RSI has closed above 70 level which indicates reassures the bullish trend.
“Price movement is likely to continue in higher top higher bottom formation in the coming months and will proceed towards the immediate target of 1360 followed by 1610 levels,” suggests Pandya.
He advises traders to buy the stock at the current level or on dips keeping Rs 675 as the stop loss for a target of Rs 1360-1610 levels with a holding time period of 5-6 months.
Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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