The stock of Pidilite Industries, which is on a long-term uptrend, lost momentum in October last year after reaching ₹2,500 levels. This level blocked the rally and following this, the stock was witnessing a gradual decline in price.
Although there was no trend reversal, the stock saw its price fall towards the key support of ₹2,200. Thankfully, this support arrested the decline in early December and since then, the scrip is on a recovery mode.
The stock gathered enough momentum and consequently, it breached the resistance of ₹2,500 on Tuesday with strong volumes. As it closed at ₹2,638 on Wednesday, it can be assumed that ₹2,500 is decisively breached and this opens the possibility of another leg of uptrend. Yet, there could be a dip to ₹2,560 before making fresh highs.
Considering the above factors, traders can initiate fresh longs at current levels and accumulate on a dip to ₹2,560. Place initial stop-loss at ₹2,500 and revise it upwards to ₹2,600 if the stock crosses over ₹2,700. Liquidate the longs at ₹2,800.
(Note: The recommendations are based on technical analysis. There is a risk of loss in trading.)