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The auto stock was moving in a broad range of 1,100 points since February where Rs 8,300 acted as an important resistance, while on the downside, Rs 7,200 acted as strong support.
The stock eventually saw a breakout from this range in July 2022, which is a bullish sign, and the momentum could take it to Rs 9,250, having crossed its 52-week high of Rs 9,022 recorded on 10 February 2022 .
The auto and auto ancillary space extended their outperformance as the Nifty Auto index looks set to breakout above its multi-year high since CY17.
“Within the largecap auto space, we remain positive on Maruti Suzuki. “The stock remained resilient in the recent correction and is witnessing a breakout from the four-month consolidation, re-initiating upmove and fresh entry opportunities,” Dharmesh Shah, Technical Head, ICICI Direct, said in a note.
On the price front, the stock is now trading above the 50-WMA short-term moving average on the weekly chart, which is a positive sign. It is now trading above the all important short and long term moving averages of the 5, 10, 30, 50, 100 and 200-DMAs.
On the weekly chart, the stock has managed to hold above its 52-week EMA since August 2020 and has formed higher levels, which suggests underlying strength on higher buying demand.
He added, “We expect the stock to extend the current upward move towards Rs 9,250 levels in the coming months as this has a measured effect of four months range breakout (Rs 8300-7200 = Rs 1100) added to Rs 8,300 level Is.”
The weekly RSI recently rose above its nine-period average to generate a buy signal. Thus, it validates the positive bias, Shah says.
He advises investors to take long positions in the next 2-3 months with a target of Rs 9,250 and a stop loss of Rs 7,740. The recommended range for buying the stock is at Rs 8,350-8,510 levels.
(Disclaimer: Recommendations, suggestions, views and opinions given by experts are their own. They do not represent the views of The Economic Times)
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