With the revival in the economy taking place, the
demand for automobile have been picking up. In such scenario, we feel there is
one company in automobile space will likely to gain growth momentum. The
company we are speaking is about Atul Auto. It is one of the leading
manufacture of three wheelers. Company is likely to show better price performance in near term
supported by good fundamentals and technical breakout.
On chart,
stock price has volatile trend, hit all-time high at Rs. 584.60 in January 2016,
then, price revered to 52 weeks’ low at Rs. 391, in the month of August 2016,
down 33.11 percent from the all-time high. Currently, stock price is trading at
Rs. 459.70. The stock price seen 17.57 percent rise in the last 1 month, from the
52-week low, indicates the rally will continue towards north.
On a different time, scale i.e. daily and weekly chart,
stock price is making higher tops and higher lows pattern and trading above
20SMA (438) and 50SMA (440) respectively, suggesting it has potential up move
in upcoming trading sessions, indicate positive outlook for the stock.
Yesterday on a daily chart it also broken out of the
bullish pattern of inverted head and shoulder pattern at Rs. 448 level and
it’s moving towards northward direction, which will take it towards Rs. 524 level. Applying other indicator on the chart like Bollinger
Band (BB) we find stock price at. Rs. 459.95 is trading
above the mid band of BB at Rs. 438, besides band is widening, indicating
positive momentum.
Also
we witnessed a breakout of long downward sloping trend line at Rs.448, indicate
rally will continue for another few months. Momentum Oscillator, MACD (Moving
Average Convergence & Divergence) on a daily chart, has given the positive
crossover, favouring the bullish view, which could witness the Atul Auto marching
higher.
RSI
(Relative Strength Index) 14-week on a weekly and monthly chart are in rising
mode and not yet overbought, which has more room left on upside. The 14-week
RSI also trade above its 9-week EMA, which is positive signal, indicate better
perform in the weeks to come.
The
trend intensity indicator demonstrates that the stock is gaining strength as months’
pass by. The psychological sentiment towards the stock remains positive. The
stock is also looking positive on the weekly chart, which foretells well for
the long term uptrend of the stock. We believe the stock has the potential to
move higher in the coming weeks and therefore recommend a buy at CMP and adding
more on dips.
