Long build-up seen in Amara Raja Batteries; gives trendline breakout

The stock of Amara Raja Batteries Limited has given a downward sloping trendline breakout on the daily timeframe. This breakout is confirmed by a robust volume. Additionally, the stock has formed a sizeable bullish candle on the breakout day.   

Further, the derivatives data is also suggesting a long build-up in the stock. On Monday, January series stock future saw 3,72,000 addition of open interest, which is 27.33 per cent addition in the open interest. It indicates that there is a long build-up in the market. January month’s current open interest is 17,33,000.  

For January expiry, the open interest wise put-call ratio (PCR) is at 0.17. A PCR below 0.70 is viewed as a strong bullish sentiment.  

Currently, the stock is trading above its short and long-term moving averages, i.e. 20-day, 50-day, 100-day, and 200-day EMAs, and these moving averages are exactly in an ascending order, which suggests that the trend is strong.  

Talking about the indicators, the 14-period daily RSI is trading above the 60 mark and it is in a rising mode. The stochastic is also suggesting a bullish momentum as it has recently given a positive crossover.  

Going ahead, we expect the bias to remain positive as long as the stock sustains above its 20-day EMA level, which is currently quoting at Rs 927 level. On the higher side, the zone of Rs 1,030-Rs 1,050 would be seen as the next resistance zone for the stock.    

On Monday, the stock of Amara Raja Batteries surged 4.40 per cent and closed at Rs 965.75 per share. The stock opened at Rs 927.60 per share and hit an intraday high of Rs 972 and a low of Rs 923.90 per share on NSE.