Technical Stock Pick: Why long-term investors should not ignore Pidilite Industries?

SECTIONSTechnical Stock Pick: Why long-term investors should not ignore Pidilite Industries?By Kshitij Anand, ETMarkets.comLast Updated: Jan 05, 2024, 01:31:00 PM ISTRate StoryFollow usShareFont SizeAbcSmallAbcMediumAbcLargeSavePrintCommentSynopsis

The specialty chemical stock hit a 52-week high of Rs 2792 on 3rd January 2024. It has risen more than 4% in a week, and over 13% in the last 3 months.

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Pidilite Industries Ltd, part of the specialty chemical space, hit a fresh 52-week high in January 2024 but the rally may not be over yet, and long-term investors can look to buy the stock for a possible target above 3000 levels, suggest experts.

The specialty chemical stock hit a 52-week high of Rs 2792 on 3rd January 2024. It has risen more than 4% in a week, and over 13% in the last 3 months.

After making a strong base above 2200 levels in October 2023 on the weekly charts, the stock has seen a vertical move since then. The Daily, Weekly, and Monthly Relative Strength Index (RSI) consistently remains above the 60 zone.

A careful analysis of Pidilite's stock performance reveals a compelling narrative of an uptrend. The stock has successfully disrupted a declining trendline on the weekly charts, showcasing a distinctly upward trajectory,” Suraj Bathija, Founder & CSO at AlgoBulls, said.

“This upward movement is further substantiated by the fact that the Daily, Weekly, and Monthly Relative Strength Index (RSI) consistently remains above the 60 zone. These indicators collectively signal a robust uptrend, creating a favorable environment for potential investors,” he said.

Weekly

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The daily Relative Strength Index (RSI) is placed at 70.7. RSI above 70 is considered overbought. This implies that stock may show a pullback. The daily MACD is above its center and signal Line, a bullish indicator.

In terms of price action, the stock is trading well above most of the crucial short- and long-term moving averages such as 5,10,30,50,100 and 200-DMA which is a positive sign for the bulls.

Daily

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“The recent market behavior of Pidilite has presented an intriguing phenomenon known as hidden divergence. This occurs when the price of a stock records a higher closing while the RSI, a crucial momentum indicator, registers a lower closing,” highlights Bathija.

“Considering the compelling technical and fundamental factors, the decision to buy Pidilite appears well-founded. The stock not only exhibits a clear uptrend but also boasts strong momentum, supported by multiple confirmations,” he said.

“We suggest a buy with an anticipated rise to 2895. A stop loss of 2475 is recommended to manage potential risks within the first quarter of FY 2024,” recommended Bathija.

“Looking ahead, if it manages to sustain its momentum and remains above 2920, marking a new high, there is a strong possibility of continued growth over the next three to four quarters,” he said.

Bathija predicts a potential surge to the all-time high of 3260, offering investors an attractive opportunity for capital appreciation.

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(Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of the Economic Times)
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