Technical Check: This FMCG underperformer of 2021 could inch towards its 52-week high in 2-3 months

Colgate Palmolive India Ltd, which has been an underperformer so far in 2021, has undergone a decent correction in the past but after taking support near at Rs 1500 – it could retest its previous high around Rs 1800 levels in next 2-3 months.

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Colgate Palmolive hits a fresh 52-week high of Rs 1823 on the BSE on 26 July and since then it has been consolidating. It took support near at Rs 1500 levels towards the end of October before bouncing back.  

The stock with a market capitalisation of more than Rs 41000 crore underwent a steep correction of around 18 per cent before regaining momentum.

The stock looks oversold and there is a higher probability of it touching the 1750-1800 levels in the next 2-3 months that translates into an upside of 16 per cent from Rs 1552 recorded on 10 November.

In terms of the September quarter shareholding data – foreign investors increased their stake in Colgate from 18.61 per cent to 19.14 per cent, while Mutual Funds also raised stake to 2.57 per cent to 2.65 per cent, according to Trendlyne data.

In the month of May 2021, the stock rose from the bottom made at 1470 and continued the up thrust till 1823 zone on the BSE, where it peaked out and thereafter witnessed a decent correction to once again arrive near the 1500 zone.

“The stock has recently witnessed consolidation making the base near 1500 levels and has indicated improvement in the bias with positive candle pattern to boost the overall view of the stock and we anticipate the stock to carry on the momentum still further upside in the coming days,” Vaishali Parekh, Vice President - Technical Research at Prabhudas Lilladher Pvt. Ltd, said.

“Technically, the RSI is well placed and has indicated a trend reversal from the highly oversold zone and has signaled a buy. The daily chart at this juncture looks attractive and has high potential on the upside with minimum risk-reward ratio,” she said.

Parekh suggested investors to buy and accumulate this midcap stock for an upside target of 1750-1800 keeping the stop loss near 1460 for a time frame of 2-3 months and expect decent return in the near future.

(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.)