Technical Check: This Ramesh Damani-owned stock likely to touch fresh highs in next 3-4 weeks; here’s why

Garden Reach Shipbuilders and Engineers Ltd has risen 27 per cent in the last 1 year compared to a 25 per cent gain seen in the Nifty50 in the same period and a 60 per cent rally seen in the S&P BSE Smallcap index.

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Ace investor Ramesh Damani picked 1.09% stake in the defence PSU in the quarter ended December 31, 2021. As per the shareholding patterns on the BSE, the celebrity investor holds 12,51,156 shares aggregating to a 1.09 per cent stake in one of India's leading shipyards.  

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The smallcap stock with a market capitalization of nearly Rs 3000 crore hit a fresh 52-week high of Rs 279.80 on the BSE on 15 November and then turned sideways.

The stock fell more than 27 per cent from the recent high of Rs 279 to hit a low of Rs 203 recorded on 27 December before bouncing back from a crucial 200-DMA placed around 204 which is a positive sign for the bulls.

The stock is now trading well above the crucial short-and-long-term moving averages of 30,50,100 and 200-DMA.

The stock fell over 5 per cent on Monday, 10 January to Rs 249 but it is still trading above Rs 240 which has acted as a stiff resistance zone in the past.

The momentum indicators suggest further upside towards Rs 284-298 levels which will take the stock to a fresh 52-week high, suggest experts.

Garden Reach, a Mini Ratna Category 1 Company has delivered 107 warships to Indian Navy, Indian Coast Guard, Mauritius Coast Guard, and Seychelles Coast Guard since 1960.

The stock has been on the radar of foreign institutional investors (FIIs). They increased their holding in Garden Reach from 1.1% in the September quarter, compared to 1.5% in the December quarter, Trendlyne data showed.

On the other hand, mutual funds decreased holding from 12.71% in the September quarter to 11.26% recorded in the December quarter, data showed.

Technically, the stock has exactly rebounded from its earlier breakout zone of 209 levels indicating a strong comeback of bulls.

“We have seen a rise in volumes on rally implies increased participation. The stock is sustaining above its 20, 50 and 100 as well 200 Day SMA which reconfirms bullish sentiments ahead,” Rajesh Palviya, Head-Technicals, and Derivatives at Axis Securities said.

“With current close, the stock has also surpassed its two years multiple resistance zone of 240 levels,” he said. The daily and weekly strength indicator RSI is in bullish mode along with positive crossover which supports rising strength.

Palviya further added that the above analysis indicates an upside of 284-298 levels in the next 3-4 weeks.

(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.)