Technical Analysis

Amara Raja Batteries (₹610.5): Buy

Yoganand D | Updated on June 20, 2019 Published on June 21, 2019

A file photo of Amara Raja Batteries' Chittoor unit

Investors with a short-term perspective can consider buying the stock of Amara Raja Batteries at current levels. The stock gained almost 5 per cent accompanied by above average volume on Thursday, forming a bullish engulfing candlestick pattern in the daily chart. This is a bullish reversal pattern.

Since encountering a key resistance at ₹796 in early February this year, the stock has been in a medium-term downtrend. The short-term trend is also down. But, the stock recorded a 52-week low at ₹572.6 and bounced up strongly on Thursday. Also the stock tested a key support at ₹600 and managed to close above this level.

The daily relative strength index has entered the neutral region from the bearish zone. The weekly RSI is recovering from the oversold territory indicating possibility of the trend reversal.

With the recently rally, the stock has formed a hammer pattern in the weekly chart which is also a bullish reversal pattern. Taking a contrarian stance, the near-term outlook is positive for the stock. It has the potential to trend upwards and reach the price targets of ₹635 and ₹650 in the short term.

Traders can buy the stock with a fixed stop-loss at ₹596.5 levels.

(Note: The recommendations are based on technical analysis. There is a risk of loss in trading.)

Published on June 21, 2019
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