FMCG Giant’s Stock Breaks Out- Can it Outperform in the Long Run?

The Nifty has witnessed a smashing rally of nearly 9% from the March lows and with this robust up-move the index has gone on to reclaim its important psychological mark of 18,300. The recent rally was broad based, we saw not only the large cap names participating in the rally, but also, the broader markets were in a buoyant mood. During the recent up-move, one of the sectoral indices which outperformed the Nifty is Nifty FMCG index.  

The Nifty FMCG index on Thursday hit a fresh all-time high and the index is up by over 8% in the last one-month. While investing or trading, stock selection is of paramount importance and one of the key hacks to select the stock is to look into the outperforming sector and one can select stock from these outperforming sectors which are breaking out of a classical technical chart pattern.  

One such stock which qualifies the above-mentioned criteria is Hindustan Unilever Limited (HUL) which is India’s largest fast moving consumer good company.  

From a technical standpoint the stock has broken out of a double bottom pattern as it closed above the valley point. The stock rallied 2.5% on Thursday and it has formed a strong bullish candle. It retraced above the 50% retracement level of the prior downtrend. The stock is decisive, trading above all key moving averages. It is 3.19% above the 20DMA and 3.73% above the 50DMA. The MACD line moved above the zero line and the histogram shows a strong bullish momentum. The RSI entered into the strong bullish zone. The Elder impulse system has formed a strong bullish bar. The stock cleared the Anchored VWAP resistance and above the Ichimoku cloud. All other indicators are in the bullish set-up. In short, the stock has registered a strong bullish breakout. Hence, keep the FMCG giant on your watchlist.   

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations.