The stock gained almost 10 per cent with good volume last week in anticipation of foreign direct investment (FDI) relaxation in multi-brand retail. With the Government allowing 51 per cent FDI in this sector on Friday evening, Pantaloon Retail is likely to witness some fast-paced action next week.
Since taking support around Rs 130 in December 2011, the stock has been on a broad sideways consolidation in the range of Rs 130-200. In early September, the stock took support at the lower boundary and reversed higher. This reversal is backed by positive divergence in the daily relative strength index. The stock is currently testing key resistance at Rs 163. A decisive rally above this level will pave way for a rally to Rs 190-200 range in the medium-term. A strong break through of Rs 200 will take the stock higher to Rs 240. Conversely, a decisive decline below Rs 130 can pull the stock down to Rs 105 in the medium-term.
Last week, the stock skyrocketed 11 per cent accompanied by good volume. On Friday, the Government increased FDI in the aviation sector to 49 per cent. Ever since registering a 52-week low at Rs 167 in late December 2011, the stock has been on an intermediate-term uptrend. The stock is hovering well above its 200-day moving average. It is currently facing key resistance at Rs 400, which the stock failed to surpass in July and August this year. An emphatic break through of this resistance will push the stock higher to Rs 440 and then to Rs 475 in the ensuing months. Next important resistance is at Rs 500.
Failure to rally above Rs 400 will confine the stock to the band between Rs 325 and Rs 400 for few more weeks. Conversely, a fall below Rs 325 will pull the stock down to the Rs 280-290 range in the medium-term.