Motilal Oswal shares rally nearly 40% in a month. What’s next?

On the charts, the stock is showing a strong uptrend across all time frames, with a series of higher tops and bottoms. Recently, it has also regained support from the 20-day and 50-day simple moving averages (SMA) and has bounced back strongly, indicating a positive trend.

“The stock's price this week has exceeded the price range of the past couple of months, closing at 822 levels, which signals a strong comeback by the bulls,” said Rajesh Palviya, SVP of Technical and Derivatives Research at Axis Securities.

The buy signal from the daily and weekly Bollinger Bands indicates increased momentum, and the high volumes during this breakout suggest greater participation, he added.


Additionally, the daily, weekly, and monthly Relative Strength Index (RSI) indicators are in positive territory, indicating strength across all time frames.

“Investors are advised to buy, hold, and accumulate this stock, with an expected upside of Rs 1,100-1,285 and downside support levels at Rs 840-820,” Palviya suggested.

However, the same parameters also indicate that the stock is significantly overextended at these levels, suggesting that it has surged well beyond its usual trend, which could signal a potential reversal.


“The stock price has surged well beyond its usual trend, signaling a potential risk of ‘mean reversion,’ where the price could pull back to more typical levels. Such a sharp deviation from its averages makes the stock more vulnerable to a correction, which could lead to a downward price movement,” said Jigar S. Patel, Senior Manager of Technical Research at Anand Rathi Shares and Stock Brokers.

Additionally, a bearish AB=CD pattern has formed on the daily chart, raising further concerns about the stock’s near-term outlook. This pattern, typically associated with potential reversals, adds to the possibility of a pullback, Patel added.

As a result, Jigar Patel advises investors to avoid initiating new long positions, as the risk of a correction is high.

“For those already holding the stock, it’s recommended to book profits in the range of Rs 950 to 1,000, as resistance is seen around the Rs 1,000 mark. Support levels are expected around Rs 900, and in the case of further declines, at Rs 830,” he suggested.

Shares of Motilal Oswal were trading 6.4% higher at Rs 990.25 on the BSE around 2 PM today.

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