Chart Check: Why this commodity chemical company at record high is still a good long-term buy

Navin Fluorine International, part of the commodity chemical space, hit a record high of Rs 4,444 on August 1, 2022, on the BSE but failed to hold on to the momentum, but experts feel that long-term trend is still on the upside.

The stock might consolidate in the near-term as it is trading near overbought levels, but investors can look for a target of Rs 5,000-7,000 in the next 6-12 months, suggest experts.

The stock rose from Rs 3,702 recorded on July 4, 2022, to Rs 4,269 as on 2 August which translates into an upside of over 15 per cent in a month.

The Relative Strength Index (RSI) is at 70.1. RSI above 70 is considered overbought. This implies that stock may show pullback, Trendlyne data showed. MACD is above its center and signal Line, this is a bullish indicator.

Other parameters such as Price Volume Trend which helps in the identification of the primary trend, and William %R indicator which reflects the level of the close relative to the highest high for the look-back period.

Additionally, Commodity Chennel Index (CCI) measures the current price level relative to an average price level over a given period of time are all point towards an upside trend.

On the price front, the stock is trading below 5-DMA, but above 10,30,50,100,and 200-DMA which is a positive sign for the bulls.

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The stock price started its up move from Rs 570 (July 2019) to Rs 4,339 (December 21), making a series of higher bottoms and higher tops in the uptrend.

During the move, the stock continuously traded above the averages and super trend was in positive mode. Most of the time, the stock traded in a range of Rs 3,150 to Rs 4,350 between December 2021 to July 2022.

The stock gave a breakout last week after it hit a fresh record high. The trend in the stock suggests continuous buyer’s interest.

“A weekly bullish candle, supported by volumes has been formed and a new high of Rs 4,431 on the NSE is made by the stock, initiating a range breakout on monthly charts,” Bharat Gala, President – Technical Research,

Securities, said.

“The PVT, WILLIAM %R and CCI (Commodity Channel Index) indicators have generated a Primary buy signal. The possible targets are Rs 5,000-6,000-7,000 in the next 6-12 months,” he said.

“If the stock price corrects downwards the buy levels are (Rs 4,195-4,050)-Rs 3,935-(Rs 3,817-3,750). Stop loss to be observed in the trade is 3550,” recommends Gala.

(Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of Economic Times)