We expect the stock to resume fresh up move and test levels of Rs 8450 levels in the medium term, says Dharmesh Shah of ICICI Securities.
Abbott India is in secular uptrend as it continues to form higher peak and higher trough in the monthly chart and is seen trading in a rising channel highlighting sustained buying demand at elevated levels. The last three month corrections has seen the stock testing the lower band of the channel thus providing fresh entry opportunity to ride the next up move in the stock.
The share price of Abbott India has registered a breakout above multiyear highs around Rs 6170 levels during middle of previous year. The stock post the breakout has rallied and hit an all time high of Rs 8820 during September 2018. The last three months sideways corrective consolidation has helped the stock work off the overbought condition developed after the previous sharp rally. The stock is currently placed at the major support area of Rs 6900-7100 being the confluence of:
- The lower band of the rising channel placed since CY’17
- 50 percent retracement of the previous up move Rs 5430-Rs 8820 placed at Rs 7130 levels.
The stock has already taken four months to retraced just 50 percent of the previous five months up move (Rs 5430 to Rs 8820). A slower retracement suggests corrective nature of current decline and positive price structure
We expect the stock to resume fresh up move and test levels of Rs 8450 levels in the medium term as it is the 80 percent retracement of the entire previous decline (Rs 8820-6900) placed around Rs 8450 levels.
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