Century Textiles & Industries, a company with interests in cotton textile, pulp and paper, and real estate sectors, has almost doubled so far in 2021 compared with an 18 percent rally in the Nifty 50 and an over 22 percent gain in the S&P BSE 500 Index.
On the technical charts, Century Textiles recorded a ‘Golden Cross’ pattern in December 2020 and since then, the stock has gained momentum, rallying about 98 percent so far in 2021 and 160 percent over the past 12 months.
The stock has a market capitalisation of more than Rs 9,000 crore.
It went under consolidation in August but recent price action suggests a further upside. Century Textiles is trading well above the crucial short- and long-term moving averages, which is a positive sign for bulls.
After taking support at Rs 742 on August 11, the stock has advanced steadily. Experts advise investors to accumulate the stock for a target of Rs 920-950, which would translate into returns of 14-16 percent from the August 16 price of Rs 814.90 on the BSE.
The stock had witnessed a huge erosion at the start of the Covid-19 pandemic last year and fell to about Rs 218. Thereafter, it was in a consolidation phase for 8-9 months until November 2020.
Since December, the stock has been on a bullish trend, breaking out above Rs 387 and continuing with a positive bias till date with occasional intervals of consolidation or short corrections.
“In technical terms, it (price action on Century Textiles) has indicated the ‘Golden Cross’ during the beginning of December, i.e., the significant 50EMA has crossed over the important 200DMA to signal a buy, thus improving the bias,” said Vaishali Parekh, assistant vice president – technical research, at Prabhudas Lilladher. “The stock has shown a series of higher bottom formation patterns above the significant 50EMA levels and currently also, after the short correction and taking support near the Rs 750 level, the stock has picked up momentum with a positive bullish candle pattern to indicate a trend reversal and we anticipate a further upward move in the coming days.”
The stock’s relative strength index has also shown a reversal to signal a buy and is well placed with the potential to rise further, justifying a buy recommendation, she said.
Parekh suggested that investors buy and accumulate the stock for an upside target of Rs 920-950 and keep a stop-loss near Rs 755 for a timeframe of 2-3 months and yield decent returns from this midcap stock.
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