Technical Stock Pick: Motilal Oswal bounces back from 2018 support; likely to retest 1900 levels

The stock hit a record high of Rs 1937 on 8th February 2024, but it failed to hold on to the momentum. It closed at Rs 1672 on 22nd March 2024 which translates into a fall of over 13%.

The stock bounced back from retesting 1600 levels on the weekly charts which acted as a stiff resistance back in January 2018. The level also coincides with the 20-week EMA.

Despite the recent fall, the stock is now trading above most of the short- and long-term moving averages such as 5,10,30,50,100 and 200-DMA on the daily charts which is a positive sign for the bulls.

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The daily Relative Strength Index (RSI) is placed at 56.1. RSI below 30 is oversold and above 70 is considered overbought, Trendlyne data showed. Motilal Oswal Financial Services’ weekly average delivery volume is 58.49%.

“Motilal Oswal Financial Services stock price is displaying strong resilience, with recent price action indicating a significant shift where previous resistance levels of 2018 are now acting as support polarity, signalling a continuation of the upward trend,” Vidnyan S. Sawant, Head of Research, GEPL Capital Ltd, said.

“Notably, the stock is supported by a confluence of factors. It has found significant support at the 38.20% Fibonacci retracement level, which aligns with the 20-weekly exponential moving average,” he said.

“This convergence suggests a strong foundation for the stock's upward movement. Furthermore, bullish momentum appears to be firmly intact, as illustrated by the RSI study on the daily scale,” highlights Sawant.

The RSI has rebounded from the oversold zone, reflecting renewed buying interest. Both the weekly and monthly RSI indicators stand above 60, confirming the bullish momentum in the stock.

“Additionally, when compared with the Nifty, the ratio chart suggests outperformance, further reinforcing the bullish sentiment,” he added.

“Going ahead, we expect the prices to go higher till the level of 1900, the Bullish view will be negated if we see prices sustaining below the 1535 level on a closing basis,” recommended Sawant.

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