Technical Check: SRF sees 100% return in 2021! This chemical company is in long term uptrend; here’s why?

Multi-business chemicals conglomerate SRF Ltd has rallied by about 107 per cent so far in 2021 compared to 21 per cent upside seen in the Nifty5o. The good news for investors is that the rally is not over yet.

The specialty chemical company with a market capitalization of more than Rs 68,000 cr hit a fresh 52-week high of Rs 2544 on 13 October and has been consolidating in a narrow range, since then.

The stock rose by nearly 7 per cent in the last 5 trading sessions and has pushed it out of the consolidation range.
 
The stock fell by over 20 per cent from its recent 52-week high of Rs 2544 and entered bear territory. But it took support at Rs 1975 recorded on 29 November before bouncing back.

After hitting a low the stock has been rising steadily and last week's price action pushed the stock above the consolidation range leading to a breakout which could take it towards next target of Rs 2800 that translates into an upside of nearly 21 per cent from Rs 2318 recorded on 24 December, suggest experts.

SRF Limited is a chemical-based multi-business entity engaged in the manufacturing of industrial and specialty intermediates.

The company’s diversified business portfolio covers fluorochemicals, specialty chemicals, packaging films, technical textiles, and coated and laminated fabrics. The growth driver for the stocks has been its chemicals business that contributes around 43 per cent of revenues.

The speciality chemicals segment focuses on agrochemical and pharmaceutical space. The business had expertise in Fluorination chemistry and is also emerging as a champion in some of the non-fluorinated chemistries.

Recently, it launched six new agro intermediaries and three pharma intermediaries for increase in revenues.  

Pricewise, the stock is in a long-term uptrend forming a higher top and higher bottom on the weekly chart i.e., each new high after an up move is higher than the previous high, and each new low after a decline is higher than the previous low.

“After hitting high of 2538 in October stock price has corrected down to 1973 and taken support at 100-day moving average (black line). For the last 8 weeks it has seen consolidation between 1870 and 2250 odd levels to form a base for next leg of up move,” Ashish Chaturmohta, Director Research, Sanctum Wealth, said.

“Now, after the up move seen in the last couple of sessions, the stock has seen breakout from upper Bollinger band (green price band) on the daily chart. The daily moving average convergence and divergence (MACD) has moved above the neutral level of zero on daily chart suggesting a resumption of the uptrend,” he said.

Chaturmohta is of the view that the stock can be bought at current levels and on dips to 2250 with a stop loss of 2140 for the target of 2800 incoming 6 to 9 months.

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.