Apollo Tyres zooms on lower rubber prices, at breakout levels

Tyre stocks gained in the first week of April amid ongoing fall in rubber prices. Apollo Tyres, the second largest tyre company by market cap has been surging since March 23 from 251.65 levels up to 307.25 which was its all-time high level. Meanwhile, the stock also gave a Double top pattern breakout at 288 levels. Before that the stock had taken double support at 228-229 levels and formed a kind of double rounding pattern.

Coming back to the recent data, the stock corrected between 32.8 and 50 per cent retracement of the rally from 251 to all-time high levels and has bounced back from the levels ahead of positive Q4 results from the company. Broking firms expect its Q4FY18 net profit to go up nearly 12-12.2 per cent YoY and 4.4 per cent QoQ. Net sales are also expected to increase by 17 per cent YoY, while marginal decline in QoQ performance.

Technically, going forward, the stock has given breakout at 288 levels, also witnessed a pullback and is now on the verge of giving a bounce back. Meanwhile, it has formed a kind of Pennant pattern breakout on daily time frame at 288 levels. The breakout is supported by rising volumes and 14-period RSI positive crossover at 58 levels. Hence, we can expect some more upside in the stock.