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The stock of Varun Beverages on Thursday broke out of the critical resistance of ₹700, which has been acting as a hurdle for the past three months. This has opened the door for further strengthening as the short-term trend now looks bullish. The stock which lost about 45 per cent from its peak in March has swiftly recovered. After rallying to ₹680 from ₹500 in the month of April, the stock started oscillating between ₹580 and ₹680. But subsequently, it breached ₹680 and closed above ₹700 on Wednesday.
Firming up in the upward bias zone, the daily relative strength index, which is already above the midpoint level of 50, the RSI appears to be poised for a fresh uptick. Adding to this, the MACD on the daily chart, which was hovering in the neutral region, is now turning its trajectory upward. Also, the price is well above both 21- and 50-DMAs. Hence, traders can initiate fresh long positions on dips with a stop-loss at ₹660. Potential targets are ₹775 and ₹800.
(Note: The recommendations are based on technical analysis. There is a risk of loss in trading.)
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