Chart Check: Granules India hits fresh 52-week high in November; time to buy?

Granules India, part of the pharma industry, has rallied by over 20% in the last three months which helped the stock hit a fresh 52-week high in November. Chart patterns suggest that the momentum is here to stay.

The stock with a market capitalisation of more than Rs 9,400 crore hit a fresh 52-week high of Rs 379 on 3 November. It has rallied more than 6% in a week, and 9% in a month.

The strong price action pushed the stock into an overbought category which suggests some pullback, but short-term traders can look to buy the stock now or on dips for a possible target above Rs 475 in the next 6 months

The Relative Strength Index (RSI) is at 71.4. RSI above 70 is considered overbought. This implies that the stock may show a pullback.

The stock found support below 50 and 200-DMA as it hit a fresh 52-week low of Rs 227. It has rallied more than 60% since then.

Recently, the stock also gave a breakout above the falling trendline resistance placed at Rs 350-367 which is positive for the bulls on the weekly charts.


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

MACD is above its center and signal line, which is a bullish indicator. Other indicators such as Aroon Up/Down, MACD & KST indicators also suggest a possible uptrend.

‘Aroon’ is used to measure the direction of market trends and spot potential reversals while Know Sure Thing or KST is a momentum oscillator that is used to identify trade signals for traders.

“The stock price started its up move from Rs 84 (July 2019). The stock made a high of Rs 438 in Dec 2020 accompanied by Higher Bottoms & Top formations,” Bharat Gala, President - Technical Research, Ventura Securities Ltd, said.

“Thereafter, the stock attracted profit booking, making lower tops and lower bottoms. It also started trading above averages which itself are trending upwards,” he said.

“The Aroon Up/Down, MACD & KST indicator suggests a possible firm uptrend. The possible target is Rs 475-650,” recommends Gala.

“If the stock price corrects downwards, the buy levels are (Rs 347-332)-320-(Rs 309-302). Stop Loss to be observed in the trade is Rs 270,” he added.

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