This is the third straight day of gains for Cochin Shipyard and the third consecutive upper circuit.
Cochin Shipyard shares had made a record high in July 2024 at ₹2,979 and from those levels, the stock has corrected nearly 50%.
Cochin Shipyard has hit the upper circuit for the third consecutive day, indicating strong bullish momentum and heightened investor interest, said Riyank Arora of Mehta Equities, adding that the stock finds immediate support at ₹1,400, while resistance is seen at ₹1,600.
“A breakout above ₹1,600 could drive the stock higher toward ₹1,750 and ₹1,800 in the near term.,” he said.
With the overall trend remaining positive, Arora said the stock appears well-positioned for further upside. However, he advised investors to watch the resistance levels closely for any signs of profit-booking.
Sustained momentum and favorable market conditions could support the stock’s journey toward higher targets, he added.
Today’s gain are in-line with a broader buying interest in defence stocks seen in Wednesday’s trading session.
Global brokerage firm JPMorgan has initiated coverage on three defence stocks — Bharat Electronics Ltd. (BEL) the latest entrant to the Nifty 50, along with Hindustan Aeronautics Ltd. (HAL) and Mazagon Dock Shipbuilders Ltd.
While the brokerage has initiated coverage on BEL and HAL with a ‘Overweight’ recommendation, JPMorgan has a ‘Neutral’ rating for Mazagon Dock Shipbuilders.
In its recent note, JPMorgan said that the country’s defence sector presents a long runway of structural and value accretive growth due to an increase in capex. Over the next five years, defence spending in India is estimated at $150 billion as against the ₹8,500 crore across the previous five years.
Speaking to CNBC-TV18 recently, India’s defence secretary said that defence spending locally will rise to 75% from 60% earlier and that the country will spend anywhere between $20 billion to $25 billion annually in the defence sector.
Rapidly increasing exports, huge focus on domestic manufacturing, high Return on Capital Employed (RoCE) and strong cash flows are some of the other positives for the sector, according to the brokerage.
The Defence Secretary had also said that Defence exports from India are expected to cross ₹30,000 crore in the current fiscal.
In terms of technicals, Cochin Shipyard is neither in the ‘oversold’ or ‘overbought’ territory with regards to its Relative Strength Index (RSI), which is now at 48.8. An RSI reading below 30 indicates that the stock is oversold.
On the charts, Cochin Shipyard was trading above its 5 day, 10 day, 20 day, and 30 day moving average but lower than its 50 day, 100 day, 150 day, and 200 day moving average.
Out of the five analysts that have coverage on Cochin Shipyard, three of them now have a ‘Buy’ rating on the counter, while one each have a ‘Hold’ and ‘Sell’ recommendation, respectively.
Cochin Shipyard shares are currently trading 5% lower at ₹1,504.05. Despite halving from its peak, the stock has still gained 120% so far this year.
