The stock of Sundaram-Clayton, after a pause, resumed its downtrend since the beginning of the year. Though the stock attempted a recovery in the February and March, the rally did not sustain as it faced another round of substantial sell-off at ₹3,250. This brought down the price to fresh 52-week low of ₹1,662.5 over a period of time. The stock recovered from that low and was largely consolidating between ₹1,740 and ₹2,100.
However, recently the stock broke out of the consolidation range that it has been holding since August. The 21-DMA has crossed over the 50-DMA level, which is a bullish indication. The daily relative strength index (RSI) is showing an uptick and the moving average convergence divergence (MACD) indicator is in the positive territory. In weekly charts , both the RSI and MACD is showing a bullish divergence, signalling a major trend reversal. Another indication of a trend reversal is a confirmed double bottom pattern in the daily charts.
Hence, one can buy the stock with stop-loss at ₹1,940 for a target of ₹2,465 over the medium-term.
Note: The recommendations are based on technical analysis. There is a risk of loss in trading.
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