Small & Midcap Mantra: After good consolidation, Escorts all geared up for further upside

Shares of Escorts, an engineering conglomerate, has risen by over 5 percent so far in 2021, compared to the nearly 20 percent rally seen in the Nifty50, and about 23 percent gains recorded in the S&P BSE 500 index.

The stock has been a marked underperformer but the recent price action suggests that momentum could slowly be building in this tractor maker. The stock, which took support at Rs 1,128 on July 28, has rallied by about 15 percent since then.

The tractor maker, with a market-capitalisation of nearly Rs 18,000 crore, hit a 52-week high of Rs 1,468 on  February 9. Since then, it has seen a steep fall. The stock took support near Rs 1,100 in May 2021, before bouncing back.

If the momentum remains intact, the stock could well retest its 52-week high of Rs 1,468 in the next 2-3 months, suggest experts.

Escorts is an Indian multinational conglomerate and pioneer of farm mechanisation in the country. The company is into agri-machinery, construction machinery, material handling, and railway equipment.

Higher bottom, RSI signal a buy

“The stock has maintained a good base near the Rs 1,100 level, and it is picking up momentum after a good consolidation phase to improve the bias,” Vaishali Parekh, Assistant Vice President, Technical Research at Prabhudas Lilladher Pvt Ltd, said.

The stock has also indicated a higher bottom formation pattern on the daily chart and it is in a rising trend to signify strength. It has the potential to rise further in the near future.

“The RSI has also indicated strength, with a trend reversal, to make the chart look attractive with potential upside scope in the coming days,” she said.

Parekh suggests investors to buy and accumulate this stock for an upside target of Rs 1,440 – 1,500, keeping the stop- loss near Rs 1,140 for a time frame of 2-3 months.

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