Indices witnessed selling pressure from Thursday’s high and today also it is trading with volatile moves. Indices recovered strongly from day’s low and traded higher. The Capital Goods sector outperformed the benchmark index and one stock from the same sector registered a technical breakout of continuation pattern by rallying almost 12%.
The stock is Elecon Engineering Company Ltd engaged in the manufacture and sale of material handling equipment and industrial gears. It operates through the following segments: Material Handling Equipment and Transmission Equipment. The Material Handling Equipment segment involves the production of raw material handling system, stackers, reclaimers, bagging and weighing machines, wagon and truck loaders, crushers, wagon tipplers and feeders and port equipment. The Transmission Equipment segment refers to gearboxes, couplings and elevator traction machines. The company was founded in 1951 and is headquartered in Vallabh Vidyanagar, India
Previously, stock was in a consolidation range of Rs 476 and Rs 335 from December 2022. It retraced 38% of its previous rally and made low of Rs 335 in December 2022. At this retracement support level, it formed a 3 months base. From April, 2023 it started its journey towards lifetime high and rallied almost 41% from the lows of April 2023. Today it registered a breakout of this multi week consolidation pattern by rallying more than 12% in single candle only.
This breakout is supported by strong volumes of more than 2.5 million shares. Closing around the day’s high will confirm the breakout. The14-day period RSI (74) placed in the super bullish zone indicates strong momentum. Minimum possible target of this breakout will be around 20%.
After considering all these factors long-term investors and momentum traders looking for opportunity in capital goods sector can add this stock to their watchlist.
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