Zomato stock rallies 12% in a week; are there more legs to this rally?
Zomato. Shares of the online food delivery aggregator surged more than 12% in the week gone by and scaled a 52-week high of Rs 84.50 on Friday. Most of the stocks in this space have had a strong run in 2023, after the massive sell-off in 2022.
On a year-to-date basis, shares of Zomato have given more than 39% returns to investors. Mutual fund data for June showed that fund managers are raising their bets on Zomato, given the consistent improvement in earnings and a positive growth outlook given by the company for the current year. For the fifth straight month in June, mutual funds increased their holdings in the company, Trendlyne data showed.
In June, Invesco Mutual Fund made its first investment into Zomato, buying shares worth Rs 100 crore. The number of mutual fund schemes holding Zomato shares at 118 was possibly at a record high. Infact, the stock is among the top 10 holdings for Motilal Oswal Mutual Fund.
Against the backdrop of a good up move in the stock, some analysts are bullish on the long-term trend. “The price action in Zomato shows the price is breaking out of a long term «triple bottom» trend reversal pattern. With such a strong trend reversal, the price action is showing a change in behaviour from a long-term downtrend to a major uptrend,” said independent analyst Manish Shah.
The 50-day moving average has crossed above the 200-day moving average, and it remains in a long- term bullish mode. One can buy the stock for a sustained rally to Rs 100, and above that to Rs 125, Shah said, recommending investors to maintain a stop loss below Rs 75. Meanwhile, market expert Sandip Sabharwal isn’t comfortable getting into the stock at current levels.
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