Stock to focus on this week: BEPL

The stock holds an excellent trading opportunity for the short to medium term.

Bhansali Engineering Polymers Limited (BEPL) is a smallcap petrochemical company engaged in the manufacture of acrylonitrile butadiene styrene (ABS) resins and styrene-acrylonitrile resins (SAN). With a market capitalisation of about Rs 2200 crore, it is one of the most promising company in its sector.

The stock of BEPL was majorly in a downtrend in the past few weeks and had fallen over 25% since its recent high. However, last week, the stock formed a hammer-like candle which is a sign of reversal. This candle was backed by above-average volume, highlighting buying interest at lower levels. Moreover, the stock found strong support at its 100-week moving average which is at around Rs 125 level. Since then, the stock has bounced sharply. On Monday, the stock has soared over 4% and has recorded huge volume during the process.

On the daily timeframe, the stock has formed a bullish engulfing-like pattern, which is a sign of reversal. With this, the stock has closed above its 20-DMA. Moreover, the RSI has jumped above the prior swing high, indicating good strength in the stock. The negative MACD histogram is diminishing, which indicates a potential reversal of the stock. The other momentum oscillators and technical indicators also point towards the improvement in the stock.

Overall, the stock shows signs of reversal on weekly as well as daily timeframes. A strong weekly closing can propel the stock even higher to the levels of Rs 160 and beyond. A hammer candle followed by a strong bullish candle is an indication for reversal and can attract potential buyers. The stock holds an excellent trading opportunity for short to medium term. Positional traders/ short term traders can include this stock in their watchlist to track further development. It has the potential to deliver decent returns in the medium term.