Chemical stocks are seeing fresh buying after a shallow retracement of the last three to four months. Shares of Naveen Fluorine have outperformed the chemical sector by maintaining higher peaks and higher troughs across all time frames, domestic brokerage house and research firm ICICI Securities reported.
Naveen Fluorine shares are currently on the verge of generating a breakout above the broader range of the last five months ( 4329-3203) and the base for the complete consolidation is the 52-week EMA (currently 3477). This signals strength and provides a fresh entry opportunity,” the brokerage note said.
It has a buy rating on specialty chemical stock with a target price of 4,835 each with a stop loss of 3,898 and a time limit of up to three months. The stock has gained over 68% in the one-year period while it has gained 14% in the past six months.
ICICI Securities expects Specialty Chemicals stock to extend current bullish momentum and move ahead This is 161.8% external retracement of recent breath as level of 4,835 in coming month ( 4329-3500).
“In a shorter time frame the stock has retraced its last 20 session corrective decline (4329-3500) in just five sessions. Sharp retracements in less than half of the time frame indicate a strong price structure,” the note added.
Naveen Fluorine International operates one of the largest integrated fluorochemicals complexes in India, with manufacturing locations in Surat and Dahej in western India and Dewas in central India.
The brokerage expects the company to generate FCF for at least 10% of the sales. It said this would help the company in organic growth towards higher ROCE generating business in future and this could help in achieving better valuations in the long run.
The views and recommendations given above are those of individual analysts or broking companies and not of Mint.
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