Technical view: NOCIL Limited

The stock trades in a tight range, and a breakout from hereon present good trading opportunities.

The stock surged over 3.12% on Monday, initially, it had witnessed selling pressure and hit the day’s low at Rs 224.50. However, strong buying interest emerged at lower levels and the stock surged about 7% from its intraday low. With this, it has crossed above its 20-DMA with heavier volumes. NOCIL Limited had lost about 10% during its correction period since its prior swing high of Rs 252.60. However, the stock has been trading in an upward channel for the past nine trading sessions. It tested its lower limit today and found good support. Interestingly, the support happens to be its 50-DMA. Currently, the stock trades above 20-DMA, 50-DMA and 100-DMA but is about 5% below its 200-DMA.

The technical indicators have a sideways to bullish view for the stock. The 14-period daily RSI (55.05) has crossover above its falling trendline and indicates improved strength in the stock. Meanwhile, the MACD line struggles to move past the signal line as they continue to coincide for the past many days. Interestingly, the On Balance Volume (OBV) has shown similar characteristics as that of RSI. The Elder Impulse system indicates a fresh buy signal, while the KST and TSI indicators are in the bullish zone and indicate improvement.

In three months, the stock has generated about 6% returns and has outperformed the broader market. The stock has strong potential on the upside. A breakout above the upper channel level of Rs 242 can see a huge rally towards the level of Rs 250, and thereafter Rs 260 in short to medium. However, a fall below the level of Rs 225, can see a fall towards the level of Rs 210 and below. The stock trades in a tight range, and a breakout from hereon and see good trading opportunities.

NOCIL Limited offers basic organic chemicals. Its business profile comprises manufacturing and trading of rubber chemicals. It is a smallcap company with a market capitalization of Rs 3950 crore.