Chart Check: 40% from June lows! This brewery’s stock forms a flag pattern; what should investors do?

Radico Khaitan, a brewery company, has fallen more than 40 per cent from its January 2022 high but the recent price action suggests that it has recouped most of the losses and the momentum is here to stay.

The stock with a market capitalisation of more than Rs 15,000 crore hit a 52-week high of Rs 1,299 on January 6, 2022, but it failed to hold on to the momentum. The stock bounced back strongly after hitting a low of Rs 731 on May 12, 2022.

The stock has rallied over 45 per cent from the lows to close at Rs 1,066 on September 9, 2022. The price action suggests that momentum is still intact.

Short-term traders can look to buy the stock now or on dips for a target of Rs 1,170 in the next 1 month. A stop loss can be placed below Rs 1,015, suggest experts.

The stock recently gave a breakout from the neckline of the inverse head and shoulder pattern earlier in September and the formation of a flag pattern on daily charts adds to a bullish stance.

The bullish flag is formed in stocks with strong uptrends and are considered continuation patterns.


After the recent price action, the stock is trading around overbought levels hence there could be some consolidation in the near term.

The relative strength index (RSI) is 70.4, and RSI above 70 is considered overbought. This implies that stock may show pullback, Trendlyne data showed. MACD is above its center and signal line, this is a bullish indicator.

On the price action front, the stock is trading above crucial short- and long-term moving averages of 5,10,30,50,100, and 200-DMA which is a positive sign for the bulls.

All beverages and distilleries stocks are having strong technical structure, among them Radico stock is performing to its peers like Mc-Dowell and UBL.

“After a decent decline of 44 per cent from its top, stock has formed a base followed by an upside move. Stock has formed 137 days long inverted head and shoulder pattern, it is a bullish reversal sign,” Kapil Shah, Technical Analyst, Emkay Global Financial Services and Trainer- FinLearn Academy, said.

“Stock has breached the neckline which completes the pattern. In a recent context, the stock had formed a bullish flap pattern, indicating a resumption of positive movement,” he said.

Momentum oscillator RSI reading is above 65 levels across all the time frames, implying momentum in the stock. It is sailing above short to long-term moving averages across all the time frames, it builds a positive view from short-term traders to investors.

“Based on the aforementioned rational, the stocks can be considered as buying opportunities in the range of Rs 1,066 to Rs 1,050 with a stop loss of Rs 1,015 on a closing basis. On the high side, the index has an upside potential up to Rs 1,170 within the time duration of 1 month,” recommends Shah.

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