Small & Midcap Mantra: Fortis Healthcare charts signal 30% rally in 4-6 months, time to buy?

Fortis Healthcare Ltd, which has outperformed benchmark indices this year to hit a 52-week high of Rs 259.65 on the BSE on July 28, is poised for another 30 percent rise in four to six months, technical analysts say.

Shares of the India-headquartered multinational chain of private hospitals have rallied more than 60 percent so far in 2021 compared with the 13 percent rise in Nifty50, and an 18 percent increase in the BSE 500 index.

Recent price action of the company, which has a market capitalization of more than Rs 19,000 crore, has pushed the stock above the Bollinger Band, resulting in a breakout which has opened a target for the stock above Rs 300, technical analysts say.

Technically, the stock is trading well above the short and long-term moving averages which is a positive sign for the bulls. Traders can buy now or on dips for a target of Rs 325 which could be achieved in the next 4-6 months, experts said.

Fortis Healthcare Limited, an IHH Healthcare Berhad Company, is a leading integrated healthcare services provider in India. It is one of the largest healthcare organisations in the country with 36 facilities.

The hospital business is well-positioned to return to profitability with a strong industry tail. Hospital capacity expansion of 1,300 beds spread over the next five years with healthy utilization will post revenue growth, Sanctum Wealth said in a report.

Diagnostic business is ripe for strong decadal growth as spending on preventive tests increases, organized players gaining market share.

“Technically, the stock is in uptrend forming higher highs and higher lows on daily chart since March'20. Also, on the long-term monthly chart, the stock has formed major multi-year rounding bottom and given breakout above 230 levels,” Ashish Chaturmohta, Director Research, Sanctum Wealth Management, said.

“Recent price correction tested the breakout level and resumed its uptrend. Price is trending along the 21-day exponential moving average as it takes support at the average and moves higher. Stock has given breakout above upper Bollinger band suggesting start of new uptrend,” he said.

Bollinger Bands plot trading bands above and below a simple moving average. The standard deviation of closing prices for a period equal to the moving average employed is used to determine the band width. This causes the bands to tighten in quiet markets and loosen in volatile markets.

As general guidelines look for buying opportunities when prices are in the lower band, and selling opportunities when the price activity is in the upper band.

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