Chart Check: 40% rally in 3 months! This tractor stock hits a fresh record high in October; time to book profits?

Escorts Kubota Ltd, part of the tractor segment, has rallied more than 40% in the last 3 months to hit a fresh record high in October and the chart pattern suggests that the rally may not be over yet.

Medium-term investors can look to buy the stock on dips for a possible target of 3800-4000 in the next 3 months, suggest experts.

The stock rose from Rs 2376 as of July 14, 2023, to Rs 3365 recorded on 16 October 2023 which translates into an upside of over 40% in 3 months.

The stock hit a record high of Rs 3435 on 11 October 2023. It witnessed marginal selling pressure, which was in line with muted market sentiment, but the upside remains intact, suggest experts.

The stock gave a breakout from a month-long consolidation last week which has opened room for the stock to head towards fresh record highs on the daily charts.

“Despite closing at an all-time high, Escorts has provided a positive upward breakout with high volume. The stock, which had been in consolidation for almost one and a half months, recently broke out upward, signalling the start of another uptrend on daily charts,” Suraj Bathija, Founder & CSO at AlgoBulls, said.

“The weekly chart’s RSI has not remained stationary for longer than two weeks since September 2019, indicating that the stock has been in an uptrend since that year and has continued to do so as of late,” he said.

In terms of price action, the stock is trading below 5-DMA but above 10,20,30,50,100 and 200-DMA on the daily charts.

The uptrend is also being supported by the volumes, as we can see that the volumes of the green candles are greater than those of the red candles.

The stock generated an Alpha over the past year, with the stock contributing 62% while the Nifty 50 and NIFTY Auto each contributed 15% and 26%, respectively.

The daily Relative Strength Index (RSI) is at 63. RSI below 30 is oversold and above 70 is considered overbought, Trendlyne data showed. The daily MACD is above its center and signal Line, this is a bullish indicator.

Fundamentally, the net profit increased by 40% between March 2023 and June 2023. The cash flow was positive as of March 2023, compared to the negative cash flow in March 2022.

“The stock has moved strongly both technically and fundamentally, making it appealing to buyers. The trend is upward. High Momentum. One can buy now at CMP with a target of 3850 and 4150 and a stop loss of 2970 until the upcoming quarter,” recommended Bathija.

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