Chart Check: Over 100% in a year! Should you stay put in this capital goods stock?


Elgi Equipments, part of the capital goods industry, has rallied more than 100 per cent in a year and the rally may not be over yet, suggest experts.

Investors who missed out on the rally seen in the compressors and pump company can look at accumulating the stock now or on dips for a possible target of Rs 500-516 in the next 1-2 months, suggest experts.

The stock with a market capitalisation of more than Rs 14,000 crore hit a record high of Rs 464.50 on 10 August 2022. The stock has been in an uptrend so far in 2022.

It rose more than 12 per cent in a week, 24 per cent in a month, and over 40 per cent in the last 3 months, Trendlyne data showed.

After hitting a low of Rs 248 on 13 May 2022 the stock bounced back sharply on the daily charts. It quickly surpassed Rs 400-levels in June but failed to hold on to the momentum.

The stock took support around its 50-DMA on daily charts and then bounced back to hit a fresh record high of Rs 464 on 10 August 2022.

The stock also recently broke out from the neckline of a cup and handle pattern formation which also auger well for the bulls.


On the price front, the stock is trading above crucial short and long term moving averages of 5,10,30,50,100 and 200-DMA which is a positive sign for the bulls.

The Relative Strength Index (RSI) is at 69.5. RSI below 30 is considered oversold and above 70 is considered overbought. MACD is above its center and signal line, this is a bullish indicator.

“The stock on the daily chart had given a breakout from a cup and handle pattern formation. The stock retested the support zone and bounced back sharply with volumes confirming the strength,” Kunal Shah-Senior Technical & Derivative Analyst at

, said.

“The momentum oscillators are in a strong uptrend and the RSI indicator is trading in the strong buy zone above 60. The stock is trading above its short-term moving averages and the lower-end support is visible at 388 where the 20 DMA is placed,” he said.

“The stock on all the time frame is trading is a strong uptrend with higher top and higher bottom formations intact. The next visible target is placed around Rs 500-516 in the next 1-2 months,” recommends Shah.

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



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