Manappuram Finance gained nearly 3 percent on March 9, continuing its northward journey for the fourth consecutive session despite a correction in the market.
The stock formed a bullish candlestick pattern with a long upper shadow on the daily charts, indicating profit-taking at higher levels. It was trading above all key moving averages (9, 50, 100 and 200 exponential moving averages).
Trading volume, too, was higher, as the stock made higher highs and higher lows for the sixth day running.
Momentum indicators relative strength index (RSI), above 60, and moving average convergence divergence (MACD), which gave positive crossover, supported the sentiment.
But one needs to be cautious, as there is a bearish divergence. The stock price is making lower highs (between January 16 and March 9) and RSI is showing higher high formation, which is a bearish divergence, indicating the price may see some correction.
Experts said the Rs 125-126 area, from where the scrip retreated sharply a couple of times, would be crucial for further upside.
At 2.40 pm, Manappuram Finance was trading 2.7 percent higher at Rs 116.65 on the NSE.
"The stock is trading with strong upside momentum but going ahead the real test for the bulls will be around the Rs 125 mark. Since the beginning of 2022, the stock made several attempts to surpass the 125 level but every time it failed," Mehul Kothari, Head of Technical Research at Anand Rathi said.
Traders who are already long can prepare to book profits around the mentioned levels, he said.
Vaishali Parekh, Vice President- Technical Research at Prabhudas Lilladher said after the gradual slide, the stock bottomed out near the 200DMA of Rs 104 and indicated a decent pullback. The uptrend has been strengthened further with the stock crossing the important 50EMA level of Rs 112 .
She expects an upward move to Rs 122-126, with RSI also showing strength and the potential to carry the momentum still further. So by keeping the stop-loss at Rs 112, one can hold and expect the target of Rs 122-126 in the near term, Parekh said.
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.