Sula Vineyards rebounds from support zone, signals upside

Sula Vineyards Ltd had given a breakout after jumping over 40 percent in nine sessions, however, the stock showed a minor correction on weak volumes on January 25 morning.

The stock gave a consolidation breakout on December 28 and thereafter rallied over 41 per cent in just nine sessions. “However, after registering the high of Rs 699, the stock has witnessed minor throwback. Interestingly, during the period of throwback, the volume activity was mostly below average, which indicates routine decline after sharp upside rally,” Sudeep Shah, head of technical and derivatives research at SBI Securities, said.

At 11.20 am, Sula Vineyards is trading at Rs 662.00 down 3 points or 0.44 percent.

Technical chart of Sula Vineyards showing consolidative breakout | Source: SBI Securities

The throwback was halted near 13-day EMA (Rs 600) level and it coincides with 38.2 per cent Fibonacci retracement level of its prior upward rally (Rs 452.55-Rs 699). The stock has formed strong base near support zone and witnessed sharp rebound on January 24. The rebound from the support zone was further reinforced by relatively higher trading volumes, Shah added.

Among the momentum indicators, Shah said the daily Relative Strength Index (RSI) is in super bullish zone as per RSI range shift rules. The RSI is on verge of giving bullish crossover, while Stochastic has already given bullish crossover. The daily MACD stays bullish as it is quoting above its zero line and signal line. The trend strength indicator, ADX is currently quoting at 49, which shows robust trend strength.

These technical factors are indicating strong bullish momentum. Shah recommend accumulating the stock in the Rs 666-660 zone with the stop loss of Rs 635. On the upside, it is likely to test Rs 700 followed by Rs 720 in short term.

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