Shares of Eicher Motors slipped 2 per cent in Monday’s trade, with technical charts hinting at a weak trend in the short term. The stock declined 2.07 per cent to hit a day’s low of Rs 3,287.50 on BSE over its previous day’s closing of Rs 3,356.85 piece. The stock eventually settled 0.94 per cent lower at Rs 3,325.30 today. A total of 6,073 shares changed hands on the counter so far, amounting to a turnover of Rs 2.01 crore. At this price, the market capitalisation (m-cap) of the company stood at Rs 90,939.65 crore.
At today’s low level of Rs 3,287.50, the stock was down 15.40 per cent from its 52-week high of Rs 3,886, hit on November 1. That said, the scrip is quoting 55.81 per cent above its one-year low of Rs 2,110 hit in March this year.
Analysts largely believe that a correction was expected on the counter, given its recent outperformance over the benchmark BSE Sensex. One analyst suggested a potential drop to Rs 3,000 while another analyst foresaw a bounce back. This analyst expected the stock to hit Rs 3,500 in the near term.
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AK Prabhakar, Head of Capital, IDBI Capital, said, “There are indications that demand in few segments was missing due to non-availability of some electronic components. Eicher Motors has been outperforming and in case the stock corrects 10-15 per cent (around Rs 3,000 levels) amid a cautious market situation, it would still be considered a good buy.”
Anand James, Chief Market Strategist at Geojit Financial Services, said, “A Head and Shoulder (H&S) pattern suggests a potential drop towards Rs 3,000.
Friday’s upside, James said, attempted facing rejection trades from the H&S neckline, which added to the surmise. A jump past Rs 3,390 may call for a push higher towards Rs 3,460-3,500, but the visibility is limited, he said.
After an excellent 2-year rally, said Pavitraa Shetty of Tips2trades, a slight correction was expected. At present, Rs 3,240 has strong support on the daily chart, she said.
Shetty advised traders to buy the stock at the prevailing levels for a short-term target of Rs 3,560-3,675 levels.
Amol Athawale, Deputy Vice-President – Technical Research at Kotak Securities said: “In this quarter so far, the stock corrected over 10 per cent. On daily and weekly charts, the stock is consistently facing selling pressure at higher levels and it is also comfortably trading below 50- and 20-day SMA (Simple Moving Averages). Technically, the short-term trend is weak but oversold. We are of the view that Rs 3,380 would be the immediate resistance zone for the bulls. Below the same, the correction wave is likely to continue till Rs 3,200-3,150. On the flip side, above Rs 3,380, we could see a pullback rally till Rs 3,425-3,455 levels.
Ravi Singh, Vice-President and Head of Research at Share India, said, “Eicher Motors seems attractive in terms of reduction in raw materials cost which may further improve the margins amid an increase in demand. The demand for commercial vehicles is also witnessing a surge due to the full-fledged resumption of economic activities. On technical setup, the stock may bounce back from its support of Rs 3,300-3,280 levels for a target of Rs 3,500 in the near term.”
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Meanwhile, Indian equity benchmarks extended their fall for the second straight session in Monday’s trade, dragged by shares of consumer durables and technology.