Technical Analysis

Trading Pick of the week: Buy Cholamandalam Investment and Finance Company

Yoganand D | Updated on October 04, 2020 Published on October 04, 2020

The stock of Cholamandalam Investment and Finance Company advanced 3.4 per cent on Thursday, breaking above a key short-term resistance at ₹250 level.

Also, the stock gained 7.8 per cent last week, conclusively breaking through a long-term resistance in the band between ₹245 and ₹250. This rally provides investors with a medium-term perspective an opportunity to buy the stock at current levels.

Following a sharp fall in March, the stock registered a 52-week low at ₹117 in early April and found support in the ₹117-120 zone. In late May, it took support from this zone and reversed direction.

Since then, the stock has been on a medium-term uptrend.

After a month of sideways correction in September, the stock continued to trend upwards last week, decisively breaching the 200-day moving average.

Moreover, it trades well above its 50- and 200-day moving averages

The daily relative strength index (RSI) features in the bullish zone and the weekly RSI is on the brink of entering the bullish zone from the neutral region. Besides, the daily as well as the weekly price rate of change indicators are hovering in the positive terrain, implying buying interest.

Outlook is bullish for the stock and it has the potential to prolong the on-going uptrend. The medium term price targets are ₹280 and ₹300, with a minor pause at around ₹285. Investors with a medium-term perspective can buy the stock with a stop-loss at ₹235.

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Published on October 04, 2020
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