Chart Check: This Damani stock is ready for rebound after 9-10 dull months; should you buy?

Indian billionaire Radhakishan Damani’s discount supermarket chain, DMart, rallied more than 11 per cent in a month and over 20 per cent in the last three months which helped the stock to break out from falling trendline resistance on monthly charts.

The stock from diversified retail space hit a 52-week high of Rs 5,899 on 18 October 2021 and since then it has been consolidating or making lower highs and lower lows on monthly charts.

Historically, after a steep-up move, the stock has seen some 6-9 months of consolidation before it resumes its upward journey.


After a strong July when the stock rose more than 24 per cent in July, and over 3 per cent so far in August suggests that the upward journey for the stock has started which could stretch it for the next couple of months.

Short-term traders can look to buy the stock now or on dips for a possible target above Rs 5,000 in the next 2 months, suggest experts.

On the daily charts, the stock is trading below the 5-DMA, but above 10,30,50,100, and 200-DMA which is a positive sign for bulls.

Since its listing, the stock has had multiple rebounds. Recently, the stock is taking support at an upwards sloping trendline which has also acted as support in the past on the monthly charts.

“Stock is in the northward journey and intermediate decline took support at a rising slope of 27-EMA. A breach of falling trendline indicated resumption of a positive trend,” Kapil Shah, Technical Analyst, Emkay Global Financial Services and Trainer- FinLearn Academy, said.

In the trading history of 65 months, the stock has 3 dull phases in terms of price-wise correction and time-wise correction.

“Each dull phase was in the range of 9 to 10 months followed by a resumption of the upside move. With a 45 per cent decline from the top, the stock has neared the previous resistance level. As per the change of polarity, previous resistance acted as support,” he said.

At support, stocks have formed bullish reversal candles like hammer pattern and bullish engulfing pattern which indicates the presence of buyer at a support level.

“On the weekly chart, the stock has moved above the horizontal resistance line. On the daily chart, the stock is sailing above long to the short-term moving average,” said Shah.

“D-Mart can be accumulated in the range of 4267 to 4180. Stop loss needs to be maintained at Rs 3,900 on a closing basis and upside potential at Rs 5,050 level in next 2 months,” recommends Shah.

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