HAL bounces back! Is the correction over?

HAL has soared over 3% during the initial hours of Monday. 

The stock of Hindustan Aeronautics Ltd outperformed the broader market on Monday as it surged over 3% from its 50-DMA. It is one of the few stocks that are in a strong uptrend despite weakness in the market. From mid-May to mid-June, the stock had climbed over 30% to hit its fresh 52-week high of Rs 1972.55. However, the stock witnessed a slight correction and fell towards the 50-DMA level of Rs 1715. Since then, the stock has been oscillating and once again, the stock has witnessed a strong bounce back from its 50-DMA level. The stock has also made a double bottom and indicates strong buying interest at lower levels.

Meanwhile, the technical parameters also show strength in the stock. The 14-period daily RSI is above 50 and has jumped sharply from lower levels. The On Balance Volume (OBV) continues to be elevated. The KST and TSI indicators show an improved strength. Meanwhile, the Relative Strength (RS) is in the bullish zone and indicates a relative outperformance of the stock as against the broader market. The stock is currently above its medium and long-term moving average and all the moving averages indicate bullishness in the stock. It is about 11% above its 100-DMA while 22% above its 200-DMA.

On a YTD basis, the stock has generated about 47% wealth for its shareholders. Considering the above points, the stock is expected to trade higher in the coming days. A surge above Rs 1800 can take the stock to the level of Rs 1950 and above. Meanwhile, the downside risk seems to be limited while its strong support lies at the 50-DMA level of Rs 1740. The stock has bounced back from its 50-DMA thrice in the past few weeks. It provides good trading opportunities and traders shouldn’t miss out on this stock.

Hindustan Aeronautics Ltd (HAL) is an Indian state-owned aerospace and defence company. With a market capitalisation of over Rs 58000 crore, it enjoys a strong market share in its industry.