How to trade Eternal shares after a 34% rally? Check key levels & strategies
Synopsis Eternal shares have surged 34% since April, fueled by investor optimism, but analysts suggest caution. Profit booking is advised near Rs 260 due to potential momentum loss, while others see buying opportunities above Rs 278 or near the Rs 240-Rs 235 support zone. Long-term investors should hold, adding on dips above Rs 245. Eternal shares have rallied nearly 34% from their April lows, currently trading around Rs 262, driven by investor optimism. The stock is also placed above its medium and long-term daily exponential moving averages.
ADVERTISEMENT While the broader trend of the stock remains positive, the recent rally has been sharp and impressive.
According to Jigar S Patel, Senior Manager - Technical Research Analyst at Anand Rathi Shares and Stock Brokers, traders should consider booking profits at current levels.
He highlighted that the stock "appears to be exhausted after a sharp rally of 42.58% from the recent bottom of Rs 194.80, currently trading near Rs 262." Patel warned that the daily RSI is showing negative divergence, indicating a potential loss of momentum.He added that a close below Rs 260 may trigger further downside toward Rs 250." Based on this, short-term traders are advised to exit positions or adopt a cautious approach near Rs 260.
ADVERTISEMENT Offering a tactical view, Hardik Matalia, Derivative Analyst at Choice Broking, suggested that traders could look for buying opportunities if the stock shows signs of reversal from the current support zone or breaks above Rs 278.He noted that, 'Eternal is forming a structure of higher highs and higher lows on the daily chart—indicating the emergence of bullish sentiment." Matalia explained that technically, a sustained move above Rs 278 would confirm a breakout and could pave the way for a rally toward its previous record highs.
ADVERTISEMENT For traders with a momentum focus, Matalia advised, "Short-term traders are advised to look for buying opportunities either on signs of reversal from the current demand zone or post-breakout above Rs 278 for momentum-based trades."
Also read: Don't peg your expectations from market too high; look for growth stories: Shreyas Devalkar
Long-term investors holding the stock are recommended to stay invested and consider adding on dips, as long as the stock holds above Rs 245.
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From a technical perspective, Shitij Gandhi, Sr. Research Analyst (Technicals) at SMC Global Securities, highlighted that the Rs 275–Rs 280 zone represents a significant resistance area.Gandhi noted that the stock has been on a steady upward trajectory in recent weeks, rallying from the Rs 200 level to around Rs 275, but a fresh leg of upside momentum is expected to emerge only after a decisive breakout above the Rs 280 resistance level.
ADVERTISEMENT On the downside, Gandhi identified solid support near the Rs 240–Rs 235 range, suggesting that traders could watch these levels for potential buying opportunities if the stock pulls back.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
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