Chart Check: 100% in a year! This smallcap stock is a good buy on dips for a target of Rs 300-375

Elecon Engineering, part of the S&P BSE Smallcap index, rose a little over 100 per cent in a year compared with a 5 per cent rise seen in the Nifty50 index in the same period. The momentum in the stock is still intact which could take it towards Rs 300-375 level in the next 6 months.

The industrial equipment maker hit a fresh record high of Rs 270 on 6 June 2022, and any dips from here could be used to add long positions for a potential target above Rs 300, suggest experts.

Existing investors can remain invested while fresh money can be deployed on dips towards Rs 217-205, and further towards 196-187-182, they say.

The sock took support near Rs 130 levels in February 2022 before bouncing back to hit a fresh record high. The stock has been making a higher high and a higher low formation since May 2022 which is a positive sign for the bulls.

Elecon is the largest manufacturer of material handling equipment and industrial gears in Asia, manufacturing reducers and mining equipment, according to the company website.

For the quarter ended March 2022, the firm reported a consolidated total income of Rs 333.60 crore, up 22.56 per cent from the last quarter, and a net profit after tax of Rs 45.68 crore in the latest quarter.

In terms of price action, the stock is trading above most of the crucial short-and long-term moving averages of 5,10,20,50,100, and 200-DMA which is a positive sign for the bulls.



“The stock price started its up move from Rs 32 (Dec 20). It made a high of Rs 186 (Sept 2021) accompanied by Higher Bottoms & Top formations,” Bharat Gala, President - Technical Research, Ventura Securities, said.

“After seeing some profit-booking, the stock again entered up move and made a high of Rs 219 on November 21. Most of the time, the stock has traded above averages and from Sept 21 till May 22, it traded in the range of Rs 140-220,” he added.

Recently, the stock gave a range breakout and made a high of Rs 235 and then Rs 270 on 6 June 2022 crossing all previous highs.

“The Aroon Up/Down, Demand Index & PVT indicator suggest a possible firm uptrend. The possible targets are Rs 300-375,” recommends Gala.

“If the stock price corrects downwards, the buy levels are Rs 217-205, and in case of downside to Rs 196 one can look to buy at Rs 187-182. A stop loss to be observed in the trade is Rs 170,” he added.

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