Balrampur Chini shows horizontal trendline breakout, signals a 'buy'

Balrampur Chini Mills shares trades at Rs 464.90 up 0.71 percent at 11:30 on Nov 23.

Analysts are optimistic about Balarampur Chini Mills, which is throwing up breakout signals, according to technical and derivatives data.

Technical chart showing Balaram Chini breakout bar | Source: SBI Securities

"On Wednesday, the stock gave a horizontal trendline breakout on the daily scale. This breakout was supported by relatively higher volume. Additionally, the stock formed a sizeable bullish candle on the breakout day, adding strength to the breakout," Sudeep Shah, head of technical and derivative research at SBI Securities, said.

"In the recent period, the stock has outperformed frontline indices. The ratio chart of the stock compared to the Nifty is at a 140-day high. Moreover, the Mansfield Relative Strength has surged above the zero line for the first time after 123 trading sessions, indicating outperformance compared to the broader market, i.e., Nifty 500," stated Sudeep Shah.

"The stock is trading above its short and long-term moving averages, both of which are on a rising trajectory. The daily and weekly RSI have surged above the 60-mark, a bullish sign. The daily MACD stays bullish as it is quoting above its zero line. Moreover, the MACD histogram suggests a pickup in upside momentum.

On the derivative front, a long build-up has been witnessed as the future has surged by nearly 3 percent. Meanwhile, the cumulative open interest (OI) of the current, next, and far series has surged by over 3 percent."

Advice to traders

The technical and derivative evidence indicates a strong upside in the next couple of trading sessions. Hence, Shah recommends accumulating the stock between Rs 462 to 458 with a stop loss of Rs 445 (closing basis) for an upside target of Rs 485, followed by Rs 500 in the short term.

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