Chart Check: This engineering firm forms double bottom formation; could rally over 100% in next 2-3 quarters

Engineers India Ltd (EIL), part of the industrial sector, has rallied more than 20% in a month to hit a fresh 52-week high in November and technical indicators suggest that the rally may not be over yet.

The stock with a market capitalisation of more than Rs 2,000 crore hit a 52-week high of Rs 81 on November 18, 2022. It has rallied more than 7% in a week, and over 20% in a month, data showed.

The stock also staged a bounce back after forming a double bottom formation on the quarterly charts which suggests that the momentum could continue towards Rs 170 level, suggest experts.

Short-term traders who missed the rally from June lows when the stock hit Rs 55 level could buy the stock now or on dips for a possible target of Rs 170 in the next 2-3 quarters, they say.

In terms of price action, the stock price is trading 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.


The Relative Strength Index (RSI) is at 64. RSI below 30 is considered oversold and above 70 is considered overbought, Trendlyne data showed. MACD is above its center and signal line, this is a bullish indicator.

PSU stocks is the theme and the flavour of this month as well as this quarter.

“Engineers India has seen a double bottom formation on quarterly charts @ Rs 55 level, post nine quarters of consolidation inside the mother candle of March 2020,” Sujit Deodhar, Head - Technical Analyst, Wellworth Share & Stock Broking Ltd., said.

“The stock has picked up momentum last quarter with a bullish candlestick bar. On daily charts, the long-term moving averages (50,100 and 200 SMA) have witnessed a positive crossover, indicating that the stock is ready for a big move,” he said.

The stochastic oscillator (which is a momentum indicator) exhibits a fresh ‘buy’ signal on quarterly charts supporting the bullish stance.

“EIL qualifies for a buy at current levels of Rs 77 & on dips towards Rs 58-60 level with stop loss to be placed below Rs 55 level on daily close basis for a huge upside target projected at Rs 170 level with holding period of next 2-3 quarters,” recommends Deodar.

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