Technical Analysis

Trading pick of the week: Buy Kansai Nerolac Paints

Yoganand D | Updated on October 18, 2020 Published on October 18, 2020

Investors with a medium-term horizon can buy the stock of Kansai Nerolac Paints at current levels.

The stock’s 5.3 per cent gain on Friday decisively breached the 21- and 50-day moving averages, and has reinforced the intermediate-term uptrend. Since registering a 52-week low at ₹296 in late March this year, the stock has been on an intermediate-term uptrend.

While trending up, the stock conclusively breached a key medium-term resistance at around ₹460 in early August. Thereafter, the price band between ₹460 and ₹480 started to provide base for the stock. A long-term support also coincides with this band.

Resumption of the uptrend has happened from a key support band; hence, this zone will continue to provide base. There has been an increase in daily volume over the past two trading sessions.

The daily relative strength index (RSI) has begun to chart higher in the neutral region towards the bullish zone and is on the brink of entering the bullish zone. Similarly, the weekly RSI is likely to enter the bullish zone. Both the daily as well as the weekly price rate of change indicators are featuring in the positive terrain, implying buying interest.

An intact intermediate-term uptrend and the resumption from a key support have strengthened the stock.

It has the potential to trend upwards and reach the price targets of ₹534 and ₹575 over the medium term, with a likely pause at ₹530. Investors can buy the stock with a stop-loss at ₹460.

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Published on October 18, 2020
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