Manappuram Finance shares: Chart Check: Up 24% since March! What is fueling the rally in Manappuram Finance?
Manappuram Finance’s stock rallied from Rs 102 on 28 February to Rs 126 recorded on 6 May 2023, an upside of 24%.
The stock started its upward journey after making a 52-week low of Rs 81 on 20th June 2022. It started making higher highs and higher lows, but the momentum fizzled out in August 2022.
The stock breached its important 50-DMA and made a low of Rs 90 in September before bouncing back. The scrip consistently faced resistance around the Rs 124-126 mark since April 2022.
The stock hit a 52-week high of Rs 127.50 on 3 April 2023 and closed at Rs 126.60 on 6 April, which resulted in a breakout above the Ascending Triangle pattern on the daily charts.
Unlike a symmetrical triangle, the resistance line is almost horizontal here (refer to chart). The lows, on the other hand, keep on increasing on a successive basis.
Ascending triangles are formed when a group of investors wants to buy a large quantity, but only below a certain price level. (Also Read: Technical analysis- Ascending & descending triangles)In terms of price action, the stock price is trading above short and long-term moving averages of 5, 10, 30, 50, 100, and 200-DMA on the daily charts, a positive sign for the bulls.
The Relative Strength Index (RSI) is placed at 68.1. RSI below 30 is considered oversold and above 70 is considered overbought, Trendlyne data showed. MACD is above its center and signal Line, this is a bullish indicator.
In November 2021, Manappuram Finance made a double top at the 220 level. The price then dropped 63% in the following 8 months, from November 2021 to June 2022, from 220 to 81.
“The stock price consolidated at that lower level and has begun to rise as of June 2022. Multiple tops between 120 and 124 were recorded at that time,” Kiran Jani CIRA, Head Technical Research at Jainam Broking Limited, said.
“But every time you took resistance at the 120-124 zone, the price recorded a higher bottom than the previous bottom. It appears that the market price is on the rise,” he said.
“At the current juncture, multiple bullish observations are visible. First, equity prices are trading above the 50 and 200 important moving averages,” added Jani.
“Second, the 14-period RSI momentum gauge is in a bullish zone. The third and most significant factor is that price gave a bullish breakout from its ascending triangle pattern and is currently trading above its main resistance zone between 120 and 124,” he explained.
“Looking at the chart, we now expect that the price will continue to rise (target 145) until it breaks the 110 level,” recommends Jani.
(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)
