The stock hit a 52-week high of Rs 131 on 13th January 2023 but failed to hold on to the momentum. It found support above Rs 100 level once in May 2023 and then again in June 2023.
The retest of the crucial support placed above Rs 100 resembles a W-shaped pattern or a double bottom pattern on the weekly charts.
Short-term traders can look to add or buy the stock on dips for a possible target of Rs 128 in the next 2 months, suggest experts.
A W-shaped pattern is formed when there is a fall in stock price followed by a rebound and then another drop to a level that is closer to the low formed initially and then again followed by a rebound.
The neckline of the W-shaped pattern was placed around 110 levels. The stock closed at Rs 112 on 28th July.
In terms of price action, the stock is trading well above most of the short- and long-term moving averages of 5,10,30,50,100 and 200-DMA on the daily charts, which is a bullish sign.The daily Relative Strength Index (RSI) is at 64.1. RSI below 30 is oversold and above 70 is considered overbought, Trendlyne data showed. MACD is above its center and signal Line, this is a bullish indicator.
ET CONTRIBUTORSIn a recent market structure, commodities have started to do well, and some traction is observed in the metal and mining space. After the recent underperformance, the metal index has resumed its upside movement.
“We like NMDC from metal space. Since the year 2012, the stock has been trading in a wide range on a monthly scale. In the recent decline, a long-time falling trend line acted as support. It coincides with the midpoint of the range which has multiple reversal levels in history,” Kapil Shah, Technical Analyst, Emkay Global Financial Services Limited and Trainer at FinLearn Academy, said.
“On the weekly chart, the long-term moving average which has been acting as a trend navigator for 14 years has reversed its downward slope to upward. The stock has formed a tiny W-shape pattern on the edge of the moving average which is a bullish development,” he said.
“On the daily chart, after a steep decline, the stock has formed a base showing reduced intensity of fall. The stock has given a breakout from double bottom formation followed by retest and upswing. It is a very healthy sign,” highlighted Shah.
“Based on the aforementioned rationale, the stock looks like a good buy opportunity in the range of Rs 112 to Rs 109 level with a stop loss of Rs 104. The stock has an upside potential up to Rs 128 levels in the next 2 months,” he recommends.
(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)