BHEL extends gains for 3rd day, experts see stock moving towards previous swing high

Stock

BHEL stock got back into momentum, rising over 6 percent on May 3 despite correction in benchmark indices. It has formed strong bullish candlestick pattern on the daily charts for yet another session, with making higher tops higher bottoms for third consecutive day.

Broadly the stock has been in an uptrend, barring intermittent small correction and consolidation, since after giving confirmation of Double Bottom formation in April when it reclaimed 200-day EMA (exponential moving average). Followed by the same, the stock gradually surpassed all key moving averages (5, 26, 50, and 100-day) as well.

The trading volumes remained strong for yet another session and the stock is few rupees away from its previous swing high or 52-week high of Rs 91.55 in December last year.

Momentum indicator RSI (relative strength index 14) at 80 levels on the daily charts also showed strong trend, while MACD (moving average convergence divergence) on the weekly scale has given positive crossover today, which is a positive sign.

Hence, experts expect BHEL to hit first its swing high, followed by Rs 100 mark in coming sessions.

“The stock had a key polarity resistance at Rs 80-level. On the daily charts, the stock broke above the 80-mark coupled with a ‘Double Bottom formation’ which gives it a price objective of Rs 88-level,” Viraj Vyas, Technical & Derivatives Analyst | Institutional Equity at Ashika Stock Broking said.

Having said that, he feels the stock appears to be in a price intense rally, and continuing to sustain above Rs 83-84 in the coming sessions can help the stock to head towards its previous swing high of Rs 92.

Vidnyan Sawant, AVP – Technical Research at GEPL Capital also believes the stock of BHEL is currently nearing its 52-week high, which tells that the stock already is in strong momentum.

“The stock has also shown a breakout of Descending triangle. It has the potential to cross the mark of Rs 100 until the level of Rs 80 is protected on the downside,” he said.

The stock was quoting at Rs 86.70 on the NSE, up 6.25 percent with volume of 8.38 crore equity shares at 15:08 hours IST.