Technical Check: Breakout on weekly charts! This small cap stock from agro space could rally 70% in 6 months

Gujarat Ambuja Exports Ltd, involved in the Agro-processing business with dominance in Maize products and Edible oils, rose more than 80 per cent in last one year compared to nearly 14 per cent upside seen in the Nifty50 in the same period.

The small cap company with a market capitalization of nearly Rs 6000 cr hit a 52-week high of Rs 260.95 on 16 March and technical indicators point towards further upside which could take the stock towards 450 in the next 6-9 months, suggest experts.

The stock has been a marked outperformer despite muted trend seen in benchmark indices amid the ongoing Russia-Ukraine war. It rose over 17 per cent in a week, and over 34 per cent in a month.

The vertical upward move seen in the stock led to a breakout on technical charts which projects a higher target of Rs 450 that translates into an upside of over 70 per cent from Rs 260 recorded on 16 March. It hit a 52-week high of Rs 265.45 in intraday. 

In terms of shareholding both FIIs reduced their holding while Mutual Funds holding remain unchanged in the December quarter. FIIs decreased holding from 4.08 per cent in September quarter to 4.06 per cent in December quarter.

Gujarat Ambuja Exports is a high beta stock and is trading well above the short- and long-term moving averages of 30,50,100 and 200-DMA which is a positive sign.

Earlier, the stock price started its down trend from Rs 155 (April 2018) to Rs 43 (March 2020). The stock traded below averages and super trend also was in a negative mode.

Value buying followed and the stock started trading above averages with super trend turning to positive mode and made a high of 202 (August 2021).

“After correcting to 151 (December 2021), recently the stock gave range breakouts and made a high of 244 accompanied by supportive volumes on weekly charts,” Bharat Gala, President - Technical Research, Ventura Securities Ltd, said.

“The breakouts happened above trend line connecting April 2018 to March 22. The Aroon Up/Dwn, ADX & MACD Indicator suggest a firm uptrend,” he said.

Gala further added that the possible target is Rs 450. If the stock price corrects downwards the buy levels are (225-213)-203-(193-188). A stop loss to be observed in the trade is Rs 167.

(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.)