Mazagon Dock shares among other defence stocks had witnessed a dream run with a sharp rally in the recent past. However, with slight gains and resistance at the higher levels, investors may wonder if there is still some heat left in the stock.
The Mazgaon docks shares have been trading in a downward trending channel from July of this year signifying an intermediate trend is on the downside.
“A possibility of a breakout can happen only above the 4,700 levels. Currently those who are looking to go long on the counter as a contra bet should wait for a closing above 4,700 and initiate 50% long with a SL of 4,500,” said Rahul Ghose, CEO of Hedged.in.
When two consecutive strong green candles are formed above this level, the second tranche of 50% can be entered, Ghose added.
After peaking near the Rs 5,860 mark in July, the stock has experienced a sharp drop of around 1,890 points, equivalent to a 32% decrease, a significant decline that reflects a strong bearish trend in the stock.Recently, Mazagon Dock shares attempted to rebound after testing its 100-day exponential moving average (DEMA), but encountered stiff resistance near the 4,423 level over the past few sessions.“From a technical perspective, the hourly Relative Strength Index (RSI) has shown a hidden bearish divergence, signalling the possibility of further downward movement,” said Jigar S Patel, Senior Manager – Technical Research, Anand Rathi Shares and Stock Brokers.
Additionally, the 200-period EMA is acting as a key resistance on hourly scale, which also coincides with the 50% retracement of the previous impulsive wave.
“This confluence of resistance factors suggests that upward momentum is limited. Therefore, it’s advisable to adopt a cautious approach and avoid long positions, as Mazdock is expected to retest its 200-day EMA, located in the 3,500-3,400 range,” Patel added.
Currently, from a technical point of view, the stock is oscillating between its 10 and 20 DEMA at Rs 4,276 level., up by 1.33% on BSE.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
