CEAT, Apollo, JK Tyre: NCLAT relief may drive tyre stocks up to 16% higher

Most tyre stocks including JK Tyre, Apollo Tyres, CEAT, MRF and TVS Srichakra look strong on technical charts, looking to rally up to 16 per cent

The National Company Law Appellate Tribunal (NCLAT) has set aside the Rs 1,788-crore penalty imposed by the Competition Commission of India (CCI) on select tyre companies for alleged cartelisation. 

The said order from the NCLAT, dated December 1, is in respose to a batch of appeals filed by tyre-makers against a CCI ruling of August 2018. The tribunal has directed CCI to pass a fresh order in the matter after re-examining the imposed penalty. Read full story here.

Following the development, most tyre stocks moved higher in Monday's weak market. Shares of Apollo Tyres and JK Tyre & Industries, for instance, inched up to 3 per cent to reach their respective all-time highs in early deals.

Shares of TVS Srichakra gained 1.25 per cent, while MRF was subdued. CEAT was down 0.4 per cent at the time of this report.
 

Here's the technical outlook for these stocks:
 

Apollo Tyres Limited (APOLLOTYRE)

Likely target: Rs 350

Upside potential: 10%

Shares of Apollo Tyres have recently broken out over the hurdle range of Rs 305- Rs 300, signalling a robust upside momentum. The stock has been defiant to any sell-off since then. Every weakness has seen added longs with chart showcasing a rally towards Rs 350 levels. The immediate support exists at Rs 310 followed by Rs 300-mark. CLICK HERE FOR THE CHART

CEAT Limited (CEATLTD)

Likely target: Rs 2,250

Upside potential: 16%

From a short-term perspective, shares of CEAT are in a bullish territory unless they slip beneath the support of Rs 1,800. The positive trend hints to an upward level of Rs 2,250, shows the daily chart. The next support comes to Rs 1,750, which, if broken, could lead to a severe downward reversal. CLICK HERE FOR THE CHART

JK Tyre & Industries Limited (JKTYRE)

Likely target: Rs 225

Upside potential: 11%

After eclipsing a new all-time high in September this year, the stock has not only broken the resistance of Rs 177, but also gained more strength to move further. The sideways movement has seen a gradual accumulation since then, as per the weekly chart. Now, a positive move over Rs 200, a sentimental mark, has propelled the stock to the next upside rally, that can easily stretch to Rs 225 levels. CLICK HERE FOR THE CHART

MRF Limited (MRF)

Outlook: Breakout rally possible if it holds firm over Rs 94,000

Stability over Rs 94,000 should boost MRF's stock to see uncharted territories ahead, shows the daily chart. The current attempt is the third effort to defend the ground over the same mark. Whenever the stock succeeds to do so, a breakout rally shall easily see a new all-time high over its current peak of Rs 98,501. The immediate support is positioned at Rs 92,000 and Rs 90,000 levels. CLICK HERE FOR THE CHART

TVS Srichakra Limited (TVSRICHAK)

Likely target: Rs 3,500

Upside potential: 11%

The “higher high, higher low” formation continues to inspire the bulls to seek higher ground. With the immediate support of Rs 2,900, the bulls are now set to aim Rs 3,500 in the coming months. Only a breach of Rs 2,900 mark could put a dent to the broad optimistic bias. Otherwise, the trend is anticipated to prosper on every healthy dip. CLICK HERE FOR THE CHART