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Godrej Consumer Technical Analysis #93: Sell | Target Rs 672 | Arijit Banerjee

OUR RECOMMENDATION

CMP#716.9
IdeaSELL
Sell Range730 – 716
Target672 – 660
StopLoss*737
Duration20 – 25 Trading Sessions
Potential Return^6 – 8%
CMP#IdeaSell RangeTargetStopLoss*DurationPotential Return^
716.9SELL730 – 716672 – 66073720 – 25 Trading Sessions6 – 8%

# CMP on Oct 18, 2019
* Maintain recommended StopLoss by daily closing basis.
   Once 1st target hit, reset StopLoss at 694.
^ The returns are calculated based on CMP#

COMPANY OVERVIEW

Godrej Consumer Limited engaged in the manufacturing and distributing of personal and household care products in India, Africa, Indonesia and internationally. The company offers hair colours, liquid detergents, soaps, air freshners, skin care, fabric care, hygiene and dry hair products. Established in 1897, the company has few popular brands in it’s portfolio e.g. Godrej Expert, Cinthol, Godrej No. 1, Hit, Godrej Ezee etc. The consolidated revenue drops 5.92% to Rs 2,330.59 crore as against the year-ago period.

Stock Data
NSE CodeGODREJCP
Sectoral IndexNifty FMCG
52W High849.9
52W Low575
Face Value1
Relative Performance_Godrej Consumer vs Nifty FMCG Index

TECHNICAL OBSERVATIONS (WEEKLY)

  • Attached weekly timeframe chart of Godrej Consumer signalling that the stock price was moving in a downward slopping larger consolidation pattern in the last many months and is currently near the upper boundary of this consolidation range.
  • We are expecting the price to move higher after an upside breakout or a sharp downturn after hitting the resistance.
  • Since the overall trend is bearish, we can short the stock here as the level mentioned above which can have a good risk-reward ratio.
Godrej Consumer Weekly Chart
Godrej Consumer Weekly Chart

TECHNICAL OBSERVATIONS (DAILY)

  • On the daily chart, the recent high coincides with earlier high as indicated on the chart.
  • The daily price chart shows a Shooting Star candlestick formation today, which indicates bullish trend may be reversing and it may be good time to enter into a short position.
  • ROC has formed negative divergence, where the price is making higher high, but the ROC does not. When such disagreement is spotted, there is a higher probability of a price reversal.
Godrej Consumer Daily Chart
Godrej Consumer Daily Chart

MONEY MANAGEMENT AND TRADING RULES

1)  It’s advisable not to enter/exit beyond the recommended range.
2)  Strictly follow the StopLoss as mentioned. Honour it.
3)  Use trailing StopLoss to retain profits.
4)  Diversify trading capital into our other technical recommendations.
5)  Risk only the money what you can afford to lose. Hedge accordingly.

ANALYST SUMMARY

This research analysis is prepared by Arijit Banerjee, CMT, CFTe. An engineering graduate developed an early interest in Trading since the age of 20. He is a Chartered Market Technician (CMT) accredited by CMT Association USA, the leading global authority of Technical Analysis and also has been honoured by Certified Financial Technician (CFTe) from the International Federation of Technical Analysts (IFTA), USA. His contribution to the market research was recognized by SEBI, the Regulatory Body of Indian financial market and given him the registration number INH300006582 as a Research Analyst. Over the years, he has gained experience in Technical Analysis with a demonstrated history of working in different asset classes. Himself as a trader, he has trained and continues training novice and experienced traders to become successful, confident and profitable in the financial market.

Disclosure

The views expressed herein are based solely on information available publicly/internal data/other sources believed to be reliable, but is not necessarily all-inclusive and is not guaranteed as to accuracy. The recommendations provided herein is solely for informational purposes and are not intended to be and must not be taken alone as the basis for an investment/trading decision. Trading and investing are subject to market risk and the securities discussed and opinions expressed herein may not be suitable for all investors. To read the full disclosure, please click here.

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