United Spirits shares witness 10% rally in 2 weeks. Will the bull run sustain?

The stock had been making higher highs and higher lows over the past few months on the daily timeframe, indicating sustained bullish momentum. Recently, it had consolidated near its immediate support zones and had shown a sharp upward move of nearly 10% in the last two weeks, suggesting renewed buying interest.

“A potential breakout from this consolidation range appears to be underway, further supported by a bounce from the critical support levels. The stock has also recently reclaimed its short-term and medium-term Exponential Moving Averages (EMAs), reinforcing the bullish outlook,” said Hardik Matalia, Derivatives Analyst at Choice Broking.

This EMA bounce highlights the continuation of the primary uptrend, suggesting strength in the underlying price action. However, the Relative Strength Index (RSI) currently stands at 76.54, nearing overbought territory, which indicates the possibility of a time-wise correction or sideways movement in the near term.

Such consolidation could offer a buying opportunity on dips as the stock stabilizes within its trend, Matalia believes.

He advised traders and investors to maintain trailing stop-losses to protect recent gains or consider partial profit booking at current levels. For fresh entries, a buy-on-dip strategy is recommended as long as the stock holds above the Rs 1,450 mark, focusing on key support areas around the Rs, 1,550-1,600 range for an optimal risk-reward setup.Also read: Stock Market Crash: HMPV case detection in Bengaluru scares investors, Sensex down 1,200 points

The stock is above its previous top near Rs 1,650 and also made a weekly close above this level crucial, which further strengthens the stock’s sustained momentum, stated Jigar S Patel, Senior Manager – Technical Research Analyst at Anand Rathi Shares and Stock Brokers.

Considering the RSI being in an overbought territory, he suggests caution too.

“We recommend booking profits at this stage and waiting for a pullback to re-enter at more favorable levels. Fresh long positions should be avoided, as the stock is likely to encounter resistance near current levels,” Patel added.

Around 1:15 pm today, the shares of United Spirits were trading 2% lower at Rs 1,649.45 on the BSE.

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