The current year has been remarkably favorable for domestic markets, with major indices reaching record highs. This strong performance highlights the underlying strength of the equity market, as evidenced by an  lifetime high closing of the benchmark index Nifty 50  that confirms the ongoing bullish sentiment in equities. Amidst this market backdrop, this mid-cap ceramic tile manufacturer has emerged as a compelling investment opportunity, showing significant signs of a trend reversal getting confirmed.

Asian Granito Ltd. (ASIANTILES) has notably outperformed its peers in the ceramic and sanitaryware sector. Year-to-date, the stock has surged by 38.27% while competitors like Kajaria Ceramics and Cera Sanitaryware have faced declines of 7.47% and 3.45%, respectively. This relative strength underscores the company’s resilience and potential for continued growth.

From a technical analysis perspective, the stock has been exhibiting strong bullish signals. Last week, ASIANTILES  closed at a 52-week high, marking a significant milestone in its price action. In May 2022, the stock had peaked at Rs. 86.45 , followed by a corrective decline that saw the price drop nearly 60% to stabilize around Rs. 34 in March last year. However, the stock has since rebounded and moved higher, crossing above key moving averages, including the 50-week and 100-week moving averages. This movement suggests a bullish turn in the near-term trend.

The uptrend faced resistance near its previous high in formed in November last year, leading to a retracement towards the 100-week moving average. The stock then formed a base around Rs. 51.50, signaling the resumption of an upward movement. Last week’s breakout above this resistance level has attracted significant buying interest, further supported by the stock’s move above the 200-week moving average. This price crossover is a strong indicator of a bullish trend in the underlying stock.

Additionally, the On-Balance Volume (OBV) indicator had already signaled this bullish breakout in advance. The OBV has continued to mark a 52-week high, reinforcing the bullish sentiment around the stock. The bullish divergence of the OBV and the accumulation observed over the past few weeks aligns with the positive price action, further supporting the potential for continued gains.

Given these factors, Asian Granito Ltd. presents a promising investment opportunity. Investors may consider entering near the Rs. 84-85 levels, with a potential target of Rs. 115, reflecting the stock’s strong technical setup and bullish outlook. Any price move below Rs. 78 can be considered to move out of the stock.

-Foram Chheda, CMT