Shares of Ramkrishna Forgings have rallied more than four-fold during the past year compared with a 47 percent gain in the Nifty 50, but its advance may not quite be over yet, going by technical evidence.
The recent bullish or positive crossover between its 20-month and 50-month exponential moving averages (EMA) suggests that the shares could rise towards Rs 890-1,100 in the next nine to 12 months, appreciating by 23-50 percent from the July 7 closing price of Rs 722.45 on the BSE.
Year-to-date, Ramkrishna Forgings has surged 49 percent compared with an over 12 percent rally in the Nifty 50 and a 42 percent rise in the S&P BSE Small Cap index. The stock has a market capitalisation of a little over Rs 2,200 crore.
Ramkrishna Forgings, based in Kolkata, is a supplier to companies in the automotive, railway, farm equipment, bearings, oil & gas, power, construction and earthmoving & mining sectors in India and overseas.
On the technical front, the company trades well above its 5, 10, 20, 50, 100 and 200-day moving averages, which is a positive sign for the bulls.
The stock touched a three-year high of Rs 730 earlier in July, recording a 432 percent gain from a low of Rs 137.10 in March 2020.
“In May 2021, a positive crossover took place between its 20-month and 50-month EMAs on the monthly charts. In the past, the stock has witnessed an exponential rise after identical crossovers,” said Jatin Gohil, technical and derivative research analyst at Reliance Securities. “The key technical indicators on the long-term as well as medium-term timeframe chart are in favour of the bulls.”
Gohil added that the stock has the potential to test its lifetime high of Rs 890.90 initially and Rs 1,100 subsequently, which coincides with its prior highs (placed at Rs 781 and Rs 890.90).
“In case of any decline, the stock will find support at around its 20-month EMA,” he added.
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