Technical Check: This FMCG player hints bottom formation; all set to bounce back now and climb above Rs 1000

Godrej Consumer Products which has largely performed in line with the Nifty50 so far in 2021 is showing signs of bottom formation after hitting a high of Rs 1138 on 3 September on the BSE.

The stock plunged over 18 per cent from the recent top of Rs 1,138 recorded on 3 September to hit a low of Rs 930 on 25 October.

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Technical indicators suggest that the stock is showing signs of bottom formation and investors can use dips to buy for a target of Rs 1020-1050 for the period of next 2-3 months.

The FMCG player with a market capitalization of over Rs 94000 cr reported a 4.55 per cent increase in its consolidated net profit to Rs 478.89 crore for the second quarter ended September 2021.

The Godrej group company had posted a net profit of Rs 458.02 crore in the July-September quarter a year ago. Revenue from the Indonesian market was marginally down to Rs 444.93 crore as compared with Rs 445.97 crore in the year-ago period.

YES SECURITIES maintained its ADD rating on Godrej Consumer Products post Q2 results with a target price of Rs 1070, despite near‐term headwinds given multiple potential re‐rating triggers for the company.

Technically, the stock has rallied significantly in mid-March 2021 from 650 levels to attain the peak level of 1138 in September from where on it witnessed a decent erosion.

The stock is trading below crucial short-term moving averages such as 30,50,100-Days SMA. It is still trading above the long term 200-Days Moving Average placed at Rs 884.

“Technically, a higher bottom formation pattern making the daily chart attractive and if this bottom of 880 level is sustained then the stock is well poised for further rise in the coming days and we may see a decent pullback recovery for further upward move till 1020-1050 levels,” Vaishali Parekh, Vice President - Technical Research at Prabhudas Lilladher Pvt. Ltd, said.

“The RSI indicator is also well placed and has shown consolidation near the oversold zone and with a decisive move past 925-930 levels would give more conviction to the improvement in the bias,” she said.

Parekh further added that with the risk-to-reward factor very much favourable, buying is suggested and accumulate this midcap stock for an upside target of 1020-1050 keeping strict stop loss of 870 for a time frame of 2-3 months and yield decent return.    

(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.)