Analysts Say RVNL Shares Could Test ₹725 Levels After Breakout On Daily Charts

RVNL‘s share price continued its incredible rally on Monday, surging over 15% to hit a new lifetime high of ₹567.50.

What Happened: The recent rally in the stock is fuelled by the expectation of favourable announcements during the Union Budget, set to be presented on July 23. The stock is also gaining strength as the railway ministry has chalked up plans to manufacture another 10,000 non-air conditioned coaches by 2026.

Technical Analysis: “RVNL has witnessed a significant breakout from a bullish cup and handle pattern on its daily charts, spanning 28 days,” Anshul Jain, head of research, Lakshmishree said.

He added that this technical formation, recognised for signalling a continuation of an upward trend, was confirmed with a substantial surge in trading volume as the stock price breached the 425 level. “Such a robust volume-backed breakout suggests strong market confidence and buying interest, setting the stage for a potential rally towards the 650-725 levels,” Jain added.

“Recently, RVNL exhibited a clean breakout on the daily chart, indicating a potential bullish trend,” Jigar S Patel, senior manager – technical research analyst, Anand Rathi Shares and Stock Brokers.

He added that prior to this breakout, the stock experienced a consolidation phase that lasted for four weeks, precisely around the 21-day exponential moving average (DEMA) on the daily scale. “This period of consolidation created a robust base for the subsequent breakout. The stock has successfully sustained above the previous week’s high and is now trading near the 560 mark,” he added.

Anand Rathi/ Tradingview.

“Additionally, there have been significant breaches of bearish trendlines in both the price action and the Relative Strength Index (RSI) on the daily chart. These breaches, which persisted over the past month, further strengthened the bullish outlook for RVNL,” Patel explained.

However, he cautioned that since the stock has seen a massive rally over the past two days, it might be wise to wait before adding long positions. “Based on this analysis, we recommend going long on RVNL within the price range of 500-510, targeting an upside of 630. To manage risk, it is prudent to set a stop-loss at 450 on a daily closing basis,” he added.

Price Action: RVNL’s share price was up 12.14% to trade at ₹550.65 in early trade on Monday.

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