Cummins India bounces from support zone, charts show bullish trajectory

Technical indicators suggest that Cummins India scrip is on a bullish uptrend. According to Sudeep Shah, Head of Technical and Derivative Research at SBI Securities, Cummins India is forming a sequence of higher tops and higher bottoms on the weekly scale, which signals strong bullish trend.

Cummins India

Technical chart of Cummins India shows that stock has bounced from support| Source: SBI Securities

According to Sudeep Shah, the stock exhibits a bullish major trend, indicated by the consistent formation of higher tops and higher bottoms on a weekly scale. However, it reached a peak of 1980 in August and subsequently experienced a throwback. Throughout this throwback period, the volume activity remained mostly below averages, signaling a routine decline following a sharp upside rally.

“The throwback was halted in the zone of Rs 1660-1650 level, which is the confluence of 61.8 per cent Fibonacci retracement level of its prior upward rally (1471-1980) and 34-week EMA level. The stock has formed strong base near support zone and resumed its northward journey. The reversal from support zone is confirmed by relatively higher volume.” added Shah.

He also notes that the stock has intriguingly surged above its short and long-term moving averages. These averages have begun edging higher, signaling a bullish trend. Additionally, the daily and weekly Relative Strength Index (RSI) are in bullish territory. On the daily timeframe, the Average Directional Index (ADX) is 21.92, suggesting that the trend is still in the process of development. Directional indicators persist in the ‘buy’ mode, with Positive Directional Indicator (+DI) consistently above Negative Directional Indicator (–DI).

On the derivative front, short covering is observed in Cummins India scrip, which is a bullish sign.

In terms of price levels, considering all the above factors, the stock is likely to continue its upward trajectory. Shah believes that on the upside, it is likely to test the level of Rs 1950, followed by 2010 in the short term. Meanwhile, on the downside, the zone of Rs 1750-1740 is expected to act as immediate support for the stock.

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