CDSL shares surge 9% in a week following consolidation. Will the momentum sustain?

After a period of consolidation over the last 3-4 months, the shares of Central Depository Services (CDSL) have surged 9% in just one week.

The stock is currently trading at Rs 1,600 level, near its all-time high level of Rs 1,664.40, where it is likely to face some resistance. The stock is also placed well above its significant short, medium and long term exponential moving averages (EMAs).

“The stock is now positioned above all its key Exponential Moving Averages (EMAs), including the 21, 50, 100, and 200-day EMAs, which signals an overextended rally at the present level,” said Jigar S Patel, Senior Manager - Technical Research Analyst, Anand Rathi Shares and Stock Brokers.

Given this situation, Patel has advised some caution on the stock.

“Investors are recommended to refrain from initiating fresh long positions at this stage, as the stock may face resistance after such a rapid ascent,” said Patel.

However, he advised that for investors who have already entered positions in CDSL, it is prudent to book profits in the Rs 1,575 to Rs 1,625 range to lock in gains, as a pullback or consolidation is possible after this steep run-up.

CDSL shares have doubled over the past year, rising from around Rs 800 levels in November 2023 to a new high of Rs 1664.40, following a breakout from a two-year consolidation phase.

“The outlook remains positive, with signs suggesting the continuation of the prevailing uptrend,” believes Ajit Mishra - SVP of Research at Religare Broking.

Mishra advised investors to consider accumulating the stock at current levels, with a stop loss set at Rs 1,430, targeting an upside potential of Rs 1,850+ zone.

In the last one year, the shares of CDSL have significantly outperformed Nifty 50 returns. While the latter has gained 26% in the said time period, the former has increased by 130%. In the last 6 months, the stock have increased by nearly 60%, according to the data available on Trendlyne.

Around 10:50 am today, the shares of CDSL were trading 1.4% higher at Rs 1,592.20 on the NSE.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)