Technical Talk: Voltas Ltd

The stock has surged over 2.5% and has broken out from its double-bottom pattern with heavier volume.

Voltas Limited is a midcap company, engaged in room air conditioners, contract revenue, commercial refrigeration products and sale of services. With a market capitalization of about Rs 41000 crore, it is one of the sector leaders. It holds over 15% market share of its industry.

The stock has outperformed Nifty on YTD basis, with the stock delivering nearly 4% returns on YTD basis as against flat returns of the benchmark index. It has shown good buying interest lately and has outperformed most of its peers.

The stock has surged over 2.5% and has broken out from its double-bottom pattern with heavier volume. It has formed two bottoms at the level of Rs 1150, which is also a strong support zone. The neckline of the pattern stood at Rs 1247, which is decisively taken out today. With today’s strong price action, the stock has surged above its 50-DMA and 100-DMA.

According to technical indicators, the stock is extremely bullish for the short term and can attract a lot of potential buyers. The 14-period daily RSI is just below 60 and has taken out its prior swing high. The MACD had also given a bullish crossover lately and continues its upside trajectory. According to Daryl Guppy’s Multiple Moving Average (GMMA) criteria, the stock is indicating a bullish view. Moreover, the Elder Impulse System continues to show the buy period in the stock. This pretty much summarizes the bullish sentiment of the stock.

As per the price action and pattern breakout, the stock has the potential to test the levels of 1350 and thereafter 1400 in the short to medium term. This breakout is supported by above-average volume, which is greater than 30-day and 50-day average volume and highlights larger participation by the market participants. Positional traders/ Short term traders can consider taking long positions in this stock as validated by strong price action and technical indicators.

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