Small & Midcap Mantra: Charts bullish for this chemical maker’s stock after 52-week high

Excel Industries, a chemicals maker that hit a 52-week high on July 13, has formed a bullish “pennant” pattern on its charts, which signals another 13 percent upside, technical analysis of the stock shows.

A pennant is a continuation pattern in a chart when there is a large movement in a short period of time, followed by a consolidation period and then a breakout movement in the same direction as the initial big move.

The stock, with a market capitalisation of Rs 1,500 crore, rose more than 45 percent so far in 2021, outperforming the Nifty50’s 14 percent rally. It rallied over 50 percent in the last 3 months.

“The chemical space has seen positive momentum in past few weeks. Within this space Excel Industries has remained laggard. However, over past few weeks we observe share price holding up well and forming a bullish pennant formation above its 10-week EMA subsequent to breakout from 2 year rounding bottom formation,” Dharmesh Shah, Head – Technical, ICICI direct said in a recent report.

“We expect the stock to catch up from here on and head towards the target of Rs 1,410 based on pattern implication of pennant breakout. Structurally, after 7 quarters base formation, the stock has witnessed breakout with volumes, the stock is on verge of breakout after bullish pennant formation, signalling a positive price structure,” he said.

Shah suggests that the stock has immediate support around Rs 1085 being 80 percent retracement of the past three-day rally. Among oscillators, RSI has generated bullish crossover recently thus validates positive bias in the stock.

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