Technical Stock Pick: Contra buy! Asian Paints could bounce back after forming a base around 2700
Asian Paints Ltd, part of the paint sector, has remained range-bound despite benchmark indices trading fresh record highs in the short to medium term.
The paint stock has fallen in double digits in the last 3 months, but the price action suggests that it is forming a base around 2700 levels on weekly charts.
Short-term traders with a high-risk profile can look to buy the stock now for a target above 3000-3200 levels in the next 1 month, suggest experts.
The stock hit a fresh high of Rs 3566 on 24th July 2023, but it failed to hold on to the momentum.
The stock has found support above 2700 levels in March 2024, but this is not the first time when these particular levels acted as a strong support.
The stock consolidated around this range back in the January-April 2023 period. The stock might be trading below both short- and long-term moving averages on the weekly charts, but it is showing signs of consolidation.
The stock is trading above 2700 levels which acted as a strong support in April 2023. It hit a low of Rs 2705 on 3rd April 2023.
In terms of price action, the stock is trading below 5,20,30,50,100 and 200-DMA on the daily charts.
The daily Relative Strength Index (RSI) is placed at 42.4. RSI below 30 is oversold and above 70 is considered overbought, Trendlyne data showed.
“On the weekly chart, Asian Paints is forming multiple bottoms at the 2700 level and hovering around 200 period MA. Asian paint futures saw a long buildup and traded above the VWAP level of 2890 in the futures,” Shilpa Rout,
