Avenue Supermarts (Mart) Nearing a Triple Bottom Breakout: Key Support & Resistance Levels to Watch
Avenue Supermarts (DMart), the retail giant led by Radhakishan Damani, is showing strong bullish signals as it nears a triple bottom breakout on its daily chart. This technical formation is a powerful trend reversal pattern, indicating a potential shift from a downtrend to an uptrend. With the breakout level at ₹4,025 and Wednesday’s opening price at ₹4,030, traders and investors are closely watching the stock’s next move.
Understanding the Triple Bottom Pattern
The triple bottom is a bullish reversal chart pattern that signals the exhaustion of selling pressure and a potential price rebound. It consists of three distinct lows at approximately the same level, indicating strong support. When the price breaks above the neckline, it confirms a trend shift, providing a buying opportunity for traders.
How to Trade the Triple Bottom Pattern?
- Breakout Entry: Buy when the price breaks above ₹4,025, the neckline of the pattern.
- Target Price: The expected upward move is usually equal to the distance from the pattern’s bottom to the neckline, indicating a potential rally toward ₹4,490.
- Stop-Loss: To manage risk, place a stop-loss below ₹3,875, the lowest point of the triple bottom formation.
DMart Stock: Key Levels to Watch
DMart has been consistently rebounding from the ₹3,875 support level, indicating strong demand in this zone. The breakout level at ₹4,025 is crucial, and a successful breach could trigger a strong upward rally toward the next resistance at ₹4,490.
| Key Levels | Price (₹) |
|---|---|
| Support | 3,875 |
| Breakout Level | 4,025 |
| Current Price | 4,066 |
| Next Resistance | 4,490 |
About Avenue Supermarts (DMart)
Founded in 2002 by Radhakishan Damani, Avenue Supermarts Limited (DMart) is one of India’s most successful retail chains, specializing in supermarkets and hypermarkets. Headquartered in Mumbai, DMart operates across multiple Indian cities, offering groceries, apparel, home essentials, and personal care products.
Financial Performance & Key Ratios
DMart’s strong fundamentals make it a favored stock in the retail sector. Below is a breakdown of its key financial metrics:
| Metric | Value |
|---|---|
| Market Cap | ₹2,64,617 Cr. |
| Current Price | ₹4,066 |
| 52-Week High / Low | ₹5,485 / ₹3,337 |
| Stock P/E | 97.3 |
| Book Value | ₹309 |
| ROCE (Return on Capital Employed) | 19.4% |
| ROE (Return on Equity) | 14.5% |
| Face Value | ₹10.0 |
| Promoter Holding | 74.6% |
| P/B Ratio (Price to Book Value) | 13.2 |
| ROIC (Return on Invested Capital) | 14.4% |
| Debt to Equity Ratio | 0.04 |
| Pledged Shares | 0.00% |
| Industry PE | 41.3 |
| Graham Number | ₹540 |
| Intrinsic Value | ₹1,021 |
| RSI (Relative Strength Index) | 65.4 |
| EPS (Earnings Per Share) | ₹41.8 |
| 200 DMA (200-Day Moving Average) | ₹4,011 |
| Free Cash Flow (Last 3 Years) | ₹-569 Cr. |
| Free Cash Flow (Last 5 Years) | ₹-1,648 Cr. |
| Debt | ₹713 Cr. |
| Return on Assets | 12.8% |
Should You Invest in DMart?
With its low debt-to-equity ratio (0.04) and high promoter holding (74.6%), DMart remains a strong fundamentally sound stock. However, the stock is currently trading at a premium with a P/E ratio of 97.3, which is significantly higher than the industry average.
For short-term traders, the breakout above ₹4,025 presents a buying opportunity, with a target of ₹4,490. For long-term investors, DMart’s consistent growth and strong financials make it a stock worth holding, but valuation concerns should be kept in mind.
Frequently Asked Questions (FAQs)
1. What is a triple bottom breakout?
A triple bottom breakout is a bullish chart pattern where a stock forms three lows at a similar level, indicating strong support. Once the price breaks above the neckline, it signals a potential uptrend.
2. What is the breakout level for DMart?
The breakout level for DMart is ₹4,025. If the stock sustains above this level, it could trigger further upside momentum.
3. What is the next resistance level for DMart?
The next major resistance level is ₹4,490.
4. What is the nearest support level for DMart?
The nearest support level is ₹3,875. If the stock falls below this, it may indicate further downside pressure.
5. Is DMart a good stock to invest in?
DMart has strong fundamentals, a low debt-to-equity ratio, and high promoter holding. However, its high valuation (P/E of 97.3) suggests that investors should be cautious about entering at current levels.
6. What is DMart’s stock P/E ratio?
DMart’s stock P/E ratio is 97.3, which is much higher than the industry average of 41.3.
7. What is DMart’s intrinsic value?
The intrinsic value of DMart is estimated at ₹1,021, indicating that the stock is currently overvalued.
8. What is the return on equity (ROE) of DMart?
DMart’s ROE is 14.5%, indicating good profitability.
This article provides comprehensive insights into DMart’s technical breakout, financials, and key investment metrics. If the triple bottom breakout is successful, the stock could see a strong rally in the coming weeks. However, traders should keep an eye on key levels and manage their risk accordingly.
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Disclaimer: This blog post is for informational purposes only and should not be considered financial advice. Investors should conduct thorough research and consult with a qualified financial advisor before making any investment decisions.