The stock of Carborundum Universal, which has been on a rally since the beginning of the year, entered a consolidation phase in September. It had been oscillating between ₹820 and ₹930 till Tuesday. On Wednesday, the stock broke out of the range increasing the probability of it establishing the next leg of an uptrend.

The price pattern since June – the rally followed by consolidation and then a breakout – is a bullish implication. Indicators like the RSI and the MACD on the daily chart are showing a fresh uptick. Moreover, the breakout has occurred with considerable volume and the price has bounced off the 21-day moving average. On the upside, the stock has the potential to move past the psychological level of ₹1,000 and touch ₹1,085 in the near-term. But the stock might retest the resistance-turned-support of ₹930. Given the prevailing condition, traders can buy the stock at the current level of ₹981 and accumulate at ₹930. Place initial stop-loss at ₹890. When the stock rallies above ₹1,035, revise the stop-loss to ₹980. Exit the longs at ₹1,085.

(Note: The recommendations are based on technical analysis. There is a risk of loss in trading.)

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