On March 21, Saregama India shares rallied 15.3% in the intraday but lost half its gains amid profit booking in the session’s later part. The stock settled 7.5% higher at Rs 344.45, the highest closing level since February 10 on the NSE, witnessing a technical rebound after a bullish divergence.
The bullish divergence exists in the stock price, making lower lows and RSI equal lows during January 24 and March 15, making it a weak bullish divergence. The upcoming sharp uptrend is possible only if the stock closes above Rs 360, 200-day EMA (Exponential Moving Average), which accords with Tuesday’s high of Rs 369.5, experts said.
Saregama India formed a bullish pattern on the daily charts with a long upper shadow, signifying higher-level profit booking. Besides, the stock broke the channel’s upper threshold by a small margin, expecting to raise the possibility of further upside. On Tuesday, daily trading volumes were the highest in the last two years.
Saregama marked Rs 550, a lower high near Rs 509 in April 2022, and fell in a corrective downtrend. Being in the declining trajectory, the stock trades below the 50-, 100-, and 200-day MA. The company believes the bullish divergence on the RSI (relative strength index) increased possible technical rebound chances.
In January 2022, the stock has moved steadily since March 2020 from Rs 18 to Rs 550 levels. After that, the stock corrected to the Rs 300 level, about 50% Fibonacci retracement level of the previous advance.
An investor can buy or hold the stock for the potential upside at Rs 370 & Rs 395 levels, putting a strict stop-loss of Rs 320 on the closing basis.