Hudco on the verge of breakout, technical analyst recommends ‘buy’ in Rs 136-138 zone

Housing and Urban Development Corporation (Hudco) Ltd shares are on the verge of a breakout as the stock recorded above-average volume on Wednesday, signalling accumulation before an actual breakout.

“Housing and Urban Development Corporation Ltd marked a high of Rs 136.80 on December 28, 2023, and since then, it entered a consolidation phase. Notably, during this consolidation period, volume activity mostly remained below the 50-day average, indicating a route consolidation after a sharp upside rally,” Sudeep Shah, head of technical and derivatives research at SBI Securities, said.

Technical chart of Hudco showing volume consolidation before breakout | Source: SBI Securities

Given that the stock is trading at an all-time high, all moving averages and momentum indicators-based set-ups suggest strong momentum in the stock.

At 1.38 pm, Hudco was trading at Rs 136.25 on the National Stock Exchange, down 1.50 points, or 1.09 percent, from the previous close.

“Since November 2023, the daily Relative Strength Index (RSI) has consistently remained in the super bullish zone, further supporting the indication of strong momentum,” Shah said.

In the current phase of the upward rally, Hudco has notably outperformed frontline indices, surpassing the performance of the Nifty 500 by a substantial margin. “The relative strength comparison with both Nifty 500 and Nifty 50 has achieved remarkable heights. Noteworthy is the Mansfield’s Relative Strength indicator, which has remained consistently above the zero line since November 2022, indicative of a persistent and robust outperformance trend,” Shah said.

These technical factors suggest that the stock is likely to give a breakout in the short term. Hence, Shah recommends accumulating the stock in the zone of Rs 138-136 with a stop-loss of Rs 132. On the upside, the stock is likely to test the level of Rs 145, followed by Rs 150 in the short term.

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