Godfrey Phillips@ Rs 2,000? After a 7-year breakout, analysts see more legs to ongoing stock rally
Shares of cigarette maker Godfrey Phillips on Friday made a fresh high of Rs 1913 on BSE, taking their year-to-date rally to 65 per cent. While short term technical indicators look overbought and a possibility of profit booking cannot be ruled out, technical charts largely hint at more legs to the Godfrey’s ongoing rally, said analysts who see the stock breaching the Rs 2,000-mark soon.
Any decline would be an buying opportunity to accumulate the stock, they said.
Tirthankar Das, Technical & Derivative Analyst at Ashika Stock Broking said the stock has registered a resolute breakout above the last seven-year range and has witnessed a faster retracement of its preceding decline in just three months, signalling an extension of the up move.
Das said buying demand has recently emerged from the rising 20-day EMA (which is placed at Rs 1,585) and the rising demand line joining lows of the last two months, signalling a positive price structure.
“One can expect the stock to head towards Rs 2,055 in the near term (138.2 per cent retracement). Among the oscillators, the daily MACD has generated a buy signal moving above its nine periods average, thus, validating positive bias,” he said.
Godfrey Phillips has surged more than 30 per cent in the last one month beating benchmark Indices Sensex which has risen near to 4 percent.
“The breakout is now expected to fuel the current rally in the stock, which might take it to the next level of around Rs 2,000 level in the near term. As the stock is trading at an all-time high level, there is no resistance till the Rs 1,950-2,000 zone. It confirms the Fibonacci retrenchment, which gives a realistic potential of the breakout,” said Om Mehra, Technical Associate at Choice Broking.
Mehra said Godfrey Phillips India is trading higher than 20- and 50-DMA indicates strong traction.
“Additionally, the amount of deliveries during the month has increased by 39 per cent. Investors can add this stock in slots near to the Rs 1,500-1,600 zone in corrections; as the primary trend would not change at those levels,” said
Amit Trivedi of YES Securities: said that post multi-year congestion phase, the stock has been consistently trending up this year. A sustained move above key averages ensures positive outlook for the stock, but due to overbought condition on the short term charts, some profit taking at higher levels cannot be ruled out.
“Traders are advisable to keep strict stop loss at Rs 1,730 for existing buy positions,” Trivedi said.
On the weekly chart, the volume trend has been steady and rising for Godfrey Phillips, showing a greater enthusiasm to drive prices higher.
“A possibility of a profit booking exists because the stock has virtually gone nuts in the past 1-2 months. FIIs own 12.42 percent stake of the company, which boosts retail participants’ confidence as well. We advise taking a cautiously optimistic stance. The outlook should inevitably be considerably longer, therefore investors shouldn’t be looking at stocks from a short-term perspective,” Mehra said.
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