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Small & Midcap Mantra: After doubling in a year, KNR Construction set for next leg of rally

The bullish Flag pattern suggests another rally in KNR Construction that could take the stock to Rs 300 (an upside of 36% from CMP) in the next 6-9 months, say experts.

June 29, 2021 / 12:12 PM IST
 
 
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The stock price of KNR Construction, a multi-domain infrastructure development company, has more than doubled investors’ wealth in the last 12 months compared to an over 50 percent rally seen in the Nifty50.

On a year-to-date basis too, KNR Construction has outperformed the benchmark index, advancing about 37 percent, compared with an over 13 percent gain in the Nifty and an 18 percent increase in the BSE500 Index.

With a market capitalisation of over Rs 6,200 crore, KNR Construction hit a 52-week high of Rs 242.10 on March 2, 2021, and experts feel that the recent breakout from the Flag pattern could take the stock towards Rs 300. This translates into an upside of 36 percent from the June 28 closing price of Rs 220 on the BSE.

Long-term investors can look at holding the stock for another 6-9 months as the recent breakout, if not met with any meaningful selling pressure on the upside, can take the stock higher.

KNR Construction 28 June

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A bullish Flag pattern is formed when a stock undergoes a vertical rise and some consolidation. The vertical rise resembles a pole while the flag results from the period of consolidation. This pattern is found in stocks with strong uptrends.

KNR constructions Limited is a multi-domain infrastructure project development company providing (EPC) engineering, procurement, and construction services across various fast-growing sectors namely roads & highways, irrigation, and urban water infrastructure management.

On the technical front, the stock is well above its 50, 100, and 200-Days Moving Averages, and has given a breakout above the Flag pattern which suggests there is more upside in the offing, suggest experts.

“We believe the stock will move towards its potential target of Rs 300. The stock has given breakout from its bullish flag pattern in the week ended May 21 with above-average volume. Later, the stock oscillated in the narrow range and managed to hold higher levels,” Jatin Gohil, Technical and Derivative Research Analyst Reliance Securities said.

“The key technical indicators on the long-term timeframe chart are in favour of the bulls. We believe the stock will utilise prior consolidation and it will soon resume the northward journey,” he said.

Gohil further added that the stock has the potential to move towards its target based on flag pole. In case of decline, its prior retracement point will act as strong support.

He recommends a long position at the current juncture and on dips towards its 20-week EMA (placed at around Rs 208) for a target of Rs3 00 and a stop loss of Rs 188.

Disclaimer: The views and investment tips expressed by the investment expert on Moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.



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Kshitij Anand is the Editor Markets at Moneycontrol.
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