Stock Radar: This largecap paint company trading near lower Bollinger Band may reclaim Rs 3,000 level

Asian Paints Ltd, part of Sensex and Nifty50 indices, rose by over 17 per cent in the last year compared to the 10 per cent upside seen in Nifty50 in the same period.

The stock corrected sharply after a brief rally from Rs 2,600 recorded in March 2022 to Rs 3,200 levels in April 2022. It is now trading near the lower end of the Bollinger band which is likely to act as a support and a bounce back can be seen.



Bollinger Bands is one of the popular technical analysis tools, where three different lines are drawn, with one below and one above the security price line. Its specific period moving average is denoted as midline to form an ‘envelope’.

These lines show a band or a volatility range in which a particular security price is moving up or down. These bands show oversold and overbought conditions in relation to a selected time period moving average. Read more here

The stock has fallen more than 7 per cent in a week, and over 5 per cent in a month. It is trading below crucial short- and long-term moving averages which is a sign of caution.

But, the recent fall makes Asian Paints a good ‘buy on dips’ stock as there could be a technical bounce back from key support levels, suggest experts.

“The stock has multiple support around Rs 2,900 levels and also it is trading near the lower band of Bollinger band, so a bounce can be seen from present levels,” says Sumeet Bagadia, Executive Director, Choice Broking.

“Minor positive indications are observed from the indicator such as RSI and MACD. Short to medium term targets can be at Rs 3,200-3,300 levels and longer-term targets can be around Rs 3,500 levels,” he said.

The stock is trading near its 200-DMA and is consolidating in a range - Support is at around Rs 2,900-2,950 levels & resistance around Rs 3,200-3,300 levels.

Bagadia further added that a stop loss for buying positions can be kept around Rs 2,850 levels.

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