In focus: Rail Vikas Nigam all set to skyrocket?

In focus: Rail Vikas Nigam all set to skyrocket?

by 5paisa Research Team Last Updated: 2022-04-04T12:54:43+05:30

After almost consolidating for nine months, Rail Vikas Nigam Ltd. gave a breakout. Is it all set for a jump? Let’s find out.

In the last one year, Rail Vikas Nigam Ltd (RVNL) has surged by about 100% and has outperformed Nifty 50 by close to 50%. If we look at the performance of the stock on a year-to-date (YTD) basis, then the stock has jumped around 50%, whereas benchmark indices have witnessed an upside of 30%.

The stock has been in an uptrend from March 2020 to January 2021 post which it entered into a consolidation. It remained in consolidation for almost nine months before giving breakout this week on weekly charts with increased volumes. This week the stock has rallied over 17%. Moreover, the stock rose to a fresh all-time high today and closed with gains of around 18%.

Looking at momentum indicators such as the Relative Strength Index (RSI), it certainly seems overheated and moved into overbought territory. It is hovering at 80.6 levels, whereas its 20-week Exponential Moving Average (EMA) is at 56.78. On the other hand, Moving Average Convergence and Divergence (MACD) has made a positive crossover in the positive territory.

Rate of Change (ROC) is supporting the breakout as on weekly basis it has ascended from 3.37 to 53.2 showing strength. Also, the Average Directional Index (ADX) that is used to confirm the direction of the trend, is around the level of 40 supporting the strength of the current bullish momentum. Plus, the Bollinger band certainly indicates a possible pullback.

Rail Vikas Nigam Limited is under the ownership of Indian Railways, Ministry of Railways, Government of India. It acts as an umbrella Special Purpose Vehicle (SPV) to undertake project development, mobilisation of resources, etc.

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