Among Defence index stocks – 11 out of the 22 have gained more than 25 per cent. MTAR Technologies leads the surge, with a stupendous 244 per cent gain. Paras Defence and Space Technologies, Data Patterns (India) and Astra Microwave Products have appreciaited in the range of 70-91 per cent, shows ACE Equity data.
Muthuselvaraj M, research analyst at Mirae Asset Sharekhan remains optimistic on the future trend for defence and defence-related stocks. The analyst believes that these 3 defence stocks – Paras Defence, Zen Technologies and Garden Reach Shipbuilders can potentially rally up to 54 per cent from here.
Technical outlook on defence stocks by Muthuselvaraj M of Mirae Asset Sharekhan.
Paras Defence and Space Technologies
Recommendation: Buy
Last close: ₹1,313
Target: ₹1,620-₹2,020
Trend Reversal: ₹970
Paras Defence and Space Technologies stock has shown a strong uptrend, trading in a higher top, higher bottom pattern after breaking out of its consolidation phase between the ₹970 and ₹580 range. This indicates a potential continuation of its long-term rally, with targets of ₹1,620-₹2,020 in the medium term, says Muthuselvaraj. The higher-end of the indicated upside range translates into a potential upside of 53.9 per cent from the stock’s last closing price. The analyst reckons that existing investors can hold the stock, considering ₹1,050 as a key support. Further, he adds that the stock appears to be a ‘buy on dip’ mode as long as it sustains above ₹970 on the weekly chart. The analyst cautions that a short-term reversal could occur if the price drops below ₹970 levels. “The momentum indicator Relative Strength Index (RSI) is currently above 70 across multiple time frames, further supporting the bullish outlook. Therefore, we recommend holding the stock for an upside rally beyond ₹1,620,” explains Muthuselvaraj.
Zen Technologies
Recommendation: Buy Last close: ₹1,933 Target: ₹2,270-₹2,550 Trent Reversal: ₹1,630
The analyst from Mirae Asset Sharekhan highlights that Zen Technologies has demonstrated a significant upside breakout from its weekly rounding pattern. Further, the stock is consistently trading above all exponential moving averages, indicating a strong and sustained uptrend, he adds. “Weekly momentum indicators, including both Moving Average Convergence-Divergence (MACD) and RSI, have confirmed this positive outlook with clear bullish crossovers and robust green histograms, with RSI positioned above 70,” the analyst explains. Muthuselvaraj believes that this technical setup suggests a potential move towards price targets of ₹2,270-₹2,550 in the short to medium term. He, however, cautions that the trend could reverse if the stock falls below ₹1,630. The upside targets imply a potential upside of around 32 per cent from Thursday’s closing price.
Garden Reach Shipbuilders & Engineers (GRSE)
Recommendation: Buy Last close: ₹2,816 Target: ₹3,190-₹3,370 Trend Reversal: ₹2,530
GRSE has shown resilience after retracing nearly 61.8 per cent of its Fibonacci level from its recent high of ₹3,339, notes the analyst. Currently, the stock is demonstrating strength from its swing low of ₹2,530 on the daily chart. This indicates a potential upward movement towards the ₹3,190-₹3,370 range for the short to medium term, with the ₹2,540 level acting as a crucial support, says Muthuselvaraj. He further adds that the stock maintains its strong position, trading above the ‘Golden Crossover’ of the 200- and 50-day exponential moving averages, located at ₹2,525 and ₹2,660 respectively, on the daily timeframe. “Momentum indicators are also signalling a positive cross and an upward trend, suggesting a continued rally in the near future. Therefore, the outlook for GRSE remains positively biased, says the analyst. Disclaimer: The views expressed by the brokerage/ analyst in this article are their own and not those of the website or its management. Business Standard advises users to check with certified experts before taking any investment decisions.
