Sugar stocks moved in to the limelight on Tuesday following a smart rally in global raw sugar futures. Shree Renuka Sugars too moved up strongly, gaining 10 per cent in the last trading session. The stock has now gained momentum and investors with a short-term horizon should make the most of it. The stock was in a consolidation phase in a broad range of Rs 15 and Rs 20.5 for almost five months. During this period, the stock formed a double-bottom pattern — a bullish reversal pattern — with a neck line at Rs 20.5.
On Tuesday, the stock broke out of this pattern decisively, reinforcing the bullish momentum. The stock is hovering well above its 21- and 50-day moving averages. There has been an increase in volumes in the past four trading sessions. Indicators in the daily chart have entered the positive territory backing the uptrend. The daily moving average convergence divergence indicator has signalled a buy. Indicators in the weekly chart are trending northwards support the current uptrend. The short-term outlook for the stock appears bright. It can trend higher to Rs 22.5 or Rs 23 in the forthcoming trading sessions. The stock can be bought with a stop-loss at Rs 21.
(Note: The recommendations are based on technical analysis. There is a risk of loss in trading.)