This TVS Group stock witnesses a Cup Pattern Breakout!

This TVS Group stock witnesses a Cup Pattern Breakout!

by 5paisa Research Team Last Updated: Nov 12, 2021, 06:24 PM IST

Sundaram Clayton Limited (SCL) is part of the USD 8.5 billion TVS group, one of the largest auto components manufacturing and distributing groups in India. SCL is a leading supplier of aluminium die castings to the automotive and non-automotive sectors. Over the years, the company has built strategic partnerships with global OE/Tier one. 

With the robust manufacturing driven by TQM, TPM, Lean practices and investments in state-of-the-art technologies, SCL is poised to serve the future needs of the industry in light metal castings. 

Interestingly, the stock had gained over 3% on Friday and for the week the stock zoomed 13% and if these amazing returns don’t excite you, certainly the YTD basis gains would leave you awestruck as the stock has shot up 65% on a YTD basis. 

The stock has caught the eyes of investors and traders on Friday as it witnessed a breakout of a stage 2b Cup Pattern. The breakout of the 16-weeks long Cup Pattern is accompanied by higher-than-average volumes. The 50-weeks average volume for the stock stands around 57,500 while the current week volume is twice the 50-weeks average volume highlighting larger participation in the direction of the trend. Furthermore, the stock is trading above its 10, 30 and 40-week moving average and they are in the desired sequence. This structure indicates that the stock is in a clear uptrend. The weekly MACD is pointing northward while sustaining above its nine periods average thus validating positive bias in the stock. 

The stock is clearly in an uptrend and the trend strength is extremely high. The Average Directional Index (ADX), which shows trend strength, is as high as 41.65 on a weekly chart. Generally, above 25 levels is considered as a strong trend. In both time frames, the stock is meeting the criteria. Furthermore, +DMI is trending up and it is also above the 25-mark. 

We expect the stock to maintain positive bias and extend its up-move towards levels of Rs 5,815 level in the medium to long term as it is the measuring implication of depth of the cup pattern.   

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SENSEX
54,326.39
1,534.16 (2.91%)
Nifty 50
16,266.15
456.75 (2.89%)
Nifty Bank
34,276.40
960.75 (2.88%)

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