Chart Check: Down 40% from highs! Patterns of this Ashish Dhawan pick could be hinting at reversal

The stocks with a market capitalisation of more than Rs 9,700 crore hit a 52-week high of Rs 585 on the BSE on 10 January 2022 but it failed to hold on to the momentum. It closed at Rs 342 on 22 June which translates into a downside of over 41 per cent.

Investors who are looking for a short-term trade can look at putting fresh money now or on dips for an upside target towards Rs 365-380 in the next 4-6 weeks while long-term target is placed at Rs 480, suggest experts.

The stock first hit its first support just below the 200-DMA in February 2022, but the bounce back failed to sustain momentum and the rally fizzled out in April 2022 after hitting a high of Rs 497 on the BSE.

The stock has been making lower lows and lower highs since then. It recorded the formation of a ‘Death Cross’ back in April 2022 on the daily charts which suggest weakness in the short term.

But, on the weekly charts, it completed a bullish ABCD Harmonic pattern at 320 levels and formed a bullish harami pattern. A Bullish Harami is a technical chart pattern used by chartists to spot reversals in a bear trend.

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On the price front, the stock is trading above the 5,10-DMA but below 20,30,50,100 and 200-DMA. The Relative Strength Index or the RSI is at 42.3 which is positive.

RSI below 30 is considered oversold and above 70 is considered overbought, data from Trendlyne showed.

“The stock has completed a bullish ABCD Harmonic pattern at 320 levels and currently prices are trading within its PRZ (potential reversal zone) on the weekly time frame,” Rohan Patil, Technical Analyst at Bonanza Portfolio, said.

“In terms of candle stick prices have formed a bullish harami pattern and prices have completed a basing formation near the lower level of the pattern on the weekly time frame,” he said.

The momentum oscillator RSI (14) is showing a positive divergence at oversold levels and has sustained above 30 levels. Furthermore, prices have completed its 50 per cent retracement from the March 2020 low.

“The multiple technical supports are found at the current levels so one can initiate a Buy position at Rs 342 and more at dip near Rs 335 levels with the strict stop loss at Rs 320 levels. On the higher side Rs 365 will be the first resistance for the counter if cross above the same then Rs 380 will be on the cards for next 4-6 weeks,” recommends Patil.

Fundamental View:

Renowned investor Ashish Dhawan holds a 1.3 per cent stake in

for the quarter ended March 2022 compared to 1.8 per cent seen in the December quarter, Trendlyne data showed.

Birlasoft is part of the multibillion-dollar diversified CK Birla Group. It combines the power of domain, enterprise, and digital technologies to reimagine business processes for customers and their ecosystem, said the company website.

sees Birlasoft as a high-conviction investment idea, according to a report published in the first week of June 2022. The fair price for this small-cap IT company is estimated at Rs 480.

The company’s repeated demonstration of ‘walking the talk’ makes us believe that it is on track to achieve its stated target of USD1bn revenue by FY25E, the report added.

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