Chart Check: 20% down from highs, this specialty chemical stock breaks out from falling trendline; time to buy?

NOCIL, part of the specialty chemical space, has fallen more than 20% from its September 2022 highs but recently the stock has picked up momentum and breached a falling trendline resistance on the upside.

Short-term traders can look to buy or accumulate the stock now for a possible target of Rs 290 in the next 1-2 months, suggest experts.

NOCIL is the largest rubber chemicals manufacturer in India with the state of the art technology for the manufacture of rubber chemicals, company website showed.

The specialty chemical stock hit a 52-week high of Rs 294.85 on 12th September 2022 but it failed to hold on to the momentum. The stock closed at Rs 226 on 10 August 2023 which translates into a fall of 23%.

However, the recent momentum seen in the stock price helped the stock to breakout from a falling trendline resistance on the weekly charts which connects the highs of September 2022, May and July 2023.

The stock has risen more than 6% in a week and about 13% in a month.

The stock has made a strong base above 200 levels in July 2023. It reclaimed its 50-DMA in July 2023 and 200-DMA earlier in August on the daily charts.


“Recent price action suggests that there has been some initial buying in chemical stocks, particularly those that have been underperforming. As the prices have declined, some of these stocks have reached their long-term support levels,” Kapil Shah, Technical Analyst, Emkay Global Financial Services and Trainer at FinLearn, said.

“One such stock is Nocil, which has tested its long-term moving average and coincides with a horizontal support line. The breach of the falling trendline is an indication that buying may resume from lower levels,” he said.

The daily Relative Strength Index (RSI) is 59.9. RSI below 30 is considered oversold and above 70 is considered overbought. The daily MACD is above its center and signal line, this is a bullish indicator, Trendlyne data showed.

“The stock is forming a rectangle pattern, which is a sign of accumulation. Additionally, the momentum indicator RSI is reversing from the oversold zone,” highlights Shah.

“It is recommended that the stock be accumulated in the range of Rs 230 to Rs 220 with a stop loss of Rs 200. A positive breakout is expected above Rs 230, and there is potential for the stock to see an upside of up to Rs 290,” he recommends.

“It is important for investors to exercise caution and accumulate the stock in a staggered manner rather than buying all at once,” cautions Shah.

(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)