Another Tata stock ascent to the Rs 1 lakh crore market capitalization to set a new milestone: A Technical Analysis Case Study, do not miss this!

In a remarkable turn of events, Tata's retail arm, Trent Limited, has achieved a significant milestone by crossing the coveted Rs 1 lakh crore market capitalization. The company's stock soared to an all-time high of Rs 2900.

Case study of "Trent Ltd" - Technical Analysis

In a remarkable turn of events, Tata's retail arm, Trent Limited, has achieved a significant milestone by crossing the coveted Rs 1 lakh crore market capitalization. The company's stock soared to an all-time high of Rs 2918, reflecting the market's confidence in Trent's business operations and growth prospects.

Breakdown of the Case Study:

As you can see in the chart (from the left side), the price after September 23, 2019 was in consolidation. After the breakout (I), it went up by 30 per cent, then the price reached a buying climax, and the stock price dropped to a low of Rs 368, where it was the point to start a new long-term uptrend.

A buying climax in a chart is a peak in buying activity, marked by a rapid increase in prices and trading volume. It often occurs after a sustained uptrend. It signifies the end of a buying accumulation phase, with smart money being sold to the public.

Then the stock price started to accumulate, and rising volumes were spotted. A huge volume spurt was seen on November 23, 2020, which may be a sign of a handshake. After consolidation, the stock gave a fake breakout and shaded all buyers, immediately forming a rejection candle and a resistance on the upper side.

Note: The fake breakout candle that was formed was a green candle with a 50 per cent upper shadow, which is not a sign of a confident breakout.

As the accumulation/consolidation phase unfolded, the price broke out (II) and consolidated again in a defined range. But as you can see in the chart, the price took support at a level of Rs 1000 and stated that it would make new higher and lower highs to continue the uptrend. In this uptrend, near-upper resistance prices traded in a channel and had a breakdown to form a base structure.

The basing chart pattern, commonly used in technical analysis, indicates a pause in a downtrend where supply and demand reach equilibrium. This translates to a flat or slightly rounded price movement consolidating within a narrow range. After this base period, the price often breaks out and resumes its upward trajectory, making the pattern a potential signal for a bullish trend reversal.

On May 29, 2023, the stock price broke out (III) at its all-time high with an upthrust, stating bulls are back in the action to ride a new sharp step-up rally. The stock price formed continuation patterns like peanut and channel, as shown in the above chart, to rally almost 78 per cent till now.

The peanut chart pattern is a continuation pattern that resembles a flagpole (a strong price move) followed by a consolidation period shaped like a peanut (two converging trendlines) before breaking out in the same direction as the initial move. This pattern suggests a pause in the dominant trend where buyers or sellers gather strength before resuming the move, potentially leading to a larger price move in the breakout direction.

Recently, the stock price has rallied by giving breakouts of bullish peanut (IV) and a tight range (V), with a strong bullish candle likely to be marubozu, which suggests buyers domination in the stock trade. On the last trading day, the price formed an indecision candle after a long uptrend. It is important to watch the further moves to predict the stock's next moves.

Key takeaways from this case study:

• After the false breakout, the price has been taking support from the long-term trendline multiple times, as shown in the chart. So, the supportive trendline can be considered a strong demand zone or area.
• The breakout volumes are always massive compared to the selling volumes, indicating that there are strong institutional buyers present. Watch out for recent breakouts.
• Upper trendline acts as a resistance level, Long-term trendline acts as a support level

Stock Performance

Trent Ltd. boasts impressive returns across all timeframes, showcasing its consistent and remarkable performance. Over the past month, it delivered a solid 15.84 per cent gain, followed by a robust 36.17 per cent return over the last three months. Year-to-date, the company has generated an astounding 94.86 per cent return, highlighting its strong upward trajectory. Looking further ahead, Trent Ltd.'s returns continue to shine, with a staggering 312.77 per cent over three years and a multibagger returns of 775.86 per cent over five years, solidifying its position as a top performer in the Large-Cap segment.

Disclaimer: The article is for informational purposes only and not investment advice.