Varun Beverages showing indications of bottom after a period of consolidation lasting seven months. Is now the opportune moment to consider purchasing?
Varun Beverages Ltd, a prominent player in the FMCG sector, has shown signs of reaching a bottom after approximately 7 months of consolidation and is now poised for a breakout.
Experts suggest that medium-term traders with a high-risk appetite may consider purchasing the stock with a target price of Rs 760 within the next 2-4 months, provided it breaks out from its previous record high in July.
Since May 2024, the stock price of Varun Beverages has fluctuated within the range of Rs 550-670. Although it reached a record high of Rs 682 on July 29, 2024, it was unable to sustain that momentum and closed at Rs 648 on January 2, 2025.
Despite experiencing a correction in terms of time, the stock consistently found support above the 200-day moving average (DMA) on daily charts since October 2024. Recently, the stock rebounded after testing its 100-DMA, with strong volume activity over the past three months indicating a bullish sentiment.
Furthermore, the stock is currently trading above key short- and long-term moving averages on daily charts, including the 5, 10, 30, 50, 100, and 200-DMA. The daily Relative Strength Index (RSI) stands at 58.8, suggesting a neutral position.
According to Ajit Mishra, SVP of Research at Religare Broking Ltd, there is a noticeable rebound in the FMCG sector, with Varun Beverages aligning with this trend. Mishra noted that the stock has been consolidating within the 550-670 range for the past seven months and appears ready to break out.
Mishra recommended that traders consider accumulating the stock within the range of 635-650, with a target price of Rs 760 in the next 2-4 months. He advised placing a stop loss below Rs 595 on a closing basis.
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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.