Trending stock of Monday: Maruti Suzuki India Ltd

The rally in the auto stocks can be attributed to the government’s decision to cut excise duty on fuels.

The shares of MARUTI rallied about 4.10% towards the end of the day. Despite the market witnessing selling pressure in the latter half of the session, MARUTI remained firm and closed the day as the top gainer among the Nifty stocks. After a strong gap-up opening, the stock continued to trade higher and hit the day’s high of Rs 7954.85. It formed a strong bullish candle and recorded a huge volume. With this, it closed above its 50-DMA and now is above all its key moving averages.  

The rally in the auto stocks can be attributed to the government’s decision to cut excise duty on fuels. The government, during the weekend, announced that excise duty on petrol and diesel would be cut by Rs 8 per litre and Rs 6 per litre respectively. Thus, the auto stock ultimately jumped on Monday.  

The technical indicators indicate bullishness in the stock. The 14-period daily RSI (59.33) is pointing northwards and indicates strong strength in the stock. The MACD histogram has risen sharply and shows a strong upmove of the stock. Interestingly, the On Balance Volume has also seen a strong jump, and thus strong buying interest can be seen. The TSI and KST indicators also maintain their bullish view. The above indicators can be validated by rising volumes which demonstrate strong trading activity. Moreover, volumes have risen for the third consecutive day.  

After today’s price action, the stock is about 4.50% above its 20-DMA and 200-DMA. On a YTD basis, the stock has gained over 6% while Nifty is down by 6% for the same period. Moreover, it has also outperformed most of its peers. Considering the bullish momentum, the stock is expected to test the level of Rs 8000 in the short to medium term. The downside risk seems to be limited as per the technical analysis.