Technical Check: This footwear stock with a Mcap of over Rs 25,000 cr is on track to hit life highs; here’s why

Bata India Ltd rose largely in line with benchmark indices in the last 1 year, but the recent price action suggests that it is on track to clock fresh highs in near future.

The footwear company with a market capitalization of over Rs 25,000 crore hit a fresh 52-week high of Rs 2,261 on 16th November and then the stock went sideways.

The stock has rallied by over 8 per cent in the last month and nearly 5 per cent in the last 5 trading sessions suggests that momentum has started building up on the upside after falling over 20 per cent in November.

After hitting a high of Rs 2,261, the stock fell to a low of Rs 1,780 on 20th December, Rs 1,785 on 27th December, and it retested Rs 1,776 on 6th January 2022 – creating a triple bottom formation on the daily charts.

The scrip chart belongs to a sector that is seeing plenty of buying action. The Nifty Consumer Durables Index has maintained a higher top higher bottom formation on all time the frames like Daily, Weekly, and Monthly charts, which indicates that the uptrend for the sector is intact for the medium to long term.  

The stock has given a correction of around 21% from the top of 2,262, which was made in November 2021. The stock has found support near 1,776 levels, which coincides with the 50% Fibonacci retracement level of the previous advance from 1263-2262 levels.

“On the daily charts, the stock has made Triple Bottom price pattern near 1,800-1,775 range and moved up, which indicates the BULLISH undertone in the chart,” Vidnyan Sawant, AVP - Technical Research at GEPL Capital, said.

“From the medium-term perspective, the stock has formed CIP formation (Change in polarity) near 1800-1775 levels and moved up. Also, in the current week, the stock has breached the downward sloping trend line and sustained above its 20 Week SMA (1930) and also at a 3-weeks high. This in a way further substantiates the BULLISH outlook in the chart,” he said.  

A daily close above 2,057 levels will further confirm the breakout from the retracement with possible continuation to all-time HIGHs.
 
Sawant highlighted the target for the Bata India would be 2,262 (Lifetime High) and 2,393 (61.8% Fibonacci extension level of 1,263 - 2,262 projected from 1,776) with a Stop Loss of 1,915 on a closing basis.
 
An initial stop loss should be placed somewhere below 1,915, which is the 100 DMA, and can be trailed as the prices move up, he added.

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