Technical Check: A breakout seen in Garden Reach in October could take it towards Rs 295 in 3-4 months

Garden Reach Shipbuilders & Engineers Ltd (GRSE) has been an underperformer so far in 2021. Shares of Garden Reach rose by nearly 13 per cent compared to the 27 per cent rally seen in the Nifty50 in the same period.

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Garden Reach with a market capitalization of more than Rs 2500 crore hit a fresh 52-week high of Rs 239.35 on 13 October, but since then the stock has been consolidating.

The stock gave a breakout in October above the consolidation range since July on the monthly charts, which suggests that the bulls could take control and push the price towards Rs 295 that translates into an upside of 34 per cent from Rs 219 recorded on October 29, suggest experts.

Garden Reach Shipbuilders & Engineers is a shipbuilding company in India under the administrative control of the MoD, primarily catering to the shipbuilding requirements of the Indian Navy and the India Coast Guard.

Ever since its inception on the bourse in the year 2018, the stock prices have given steady returns to its investors.

However, in the last few months, the stock prices have been gyrating within a range and now it has finally come out of this range confirming a consolidation breakout.

“This consolidation breakout is on the upside resembling a continuation pattern known as ‘Descending Triangle’,” Rajesh Bhosale, Technical Analyst, Angel One Ltd, said.

“The volume structure is in line with the rule book of the pattern, where the upticks are supported with high volume and downticks, are comparatively low volumes,” he said.

Bhosale further added that with the government pushing its initiative of ‘Atmanirbhar Bharat’ in the defense space, this defensive shipbuilding company is likely to have a great benefit from this opportunity.

“We recommend a buy at current levels and on dips to Rs 205 for a target of Rs 295. The stop loss can be placed at Rs 185,” recommends Bhosale.

(Disclaimer: The views/suggestions/advice expressed here in this article are solely by investment experts. Zee Business suggests its readers to consult with their investment advisers before making any financial decision.)