M&M at Range Breakout with volume spurt, but lacks momentum

The utility vehicles and car maker Mahindra & Mahindra (M&M) had surged 1.1 per cent in Monday’s trade before it closed flat. The stock thereby attempted a second Range breakout in a row near 740 levels. The breakouts were duly supported by volume spurt on both the days, but 14-period RSI trailing at 53 is holding back the stock from gaining momentum.

The Auto major which holds 12.8 per cent in Nifty Auto index and also forms a part of Nifty 50 is the only Auto stock after Maruti that closed in green with marginal gains. During the day, media cued about the completion of a strategic alliance between M&M and Ford Motor Co, Detroit which is in process since September 2017. The alliance is to fetch vehicle architectures and electric power trains followed by distribution networks. The partnership would take place in a week or more.

Coming back to the technicals, M&M had given Inverse H&S breakout at 722 levels on December 15, surged up to 802 i.e. its all-time high levels on February 1. It corrected sharply by 12.7 per cent and has been trading in a range of 700-740 since then. The level of 740 acts as 38.2 per cent retracement of the prior downward rally. All said and done, M&M has a huge potential upside if it sustains above 740-750 on closing basis.