Ahead of rights issue, charts hint steady gains for Suzlon; 200-DMA is key

There is a bullish formation of a "Higher High, Higher Low" pattern on the daily chart, and only if the stock breaks the 200-DMA the trend could turn negative.

Suzlon Energy is likely to be in focus in the near term, as the company's Rs 1,200 crore rights issue opens for subscription on October 11. The company will be issuing up to 240 crore shares with a face value of Rs 2 each at Rs 5 per share. The rights issue closes on October 12.

Recently the rights issue got a fillip, after Dilip Shanghvi, the Managing Director of Sun Pharmaceutical Industries expressed his willingness to the promoters of the company to fully participate in the upcoming Rs 1,200-cr rights issue. In the past, Shanghvi had bought a 23 per cent stake in Suzlon for Rs 1,800 crore in 2015, helping the company to return to profitability after it became India’s largest convertible-bond defaulter in 2012. READ MORE

Meanwhile, last week Suzlon Energy appointed Vinod R Tanti as the CMD of the company for a tenure of three years. The said appointment took place following passing of the founder Tulsi Tanti, who held Chairman and Managing Direction position. 

Amid the current development, here’s the a technical outlook on Suzlon Energy: 

Suzlon Energy Limited (SUZLON)

Outlook: Breakout over Rs 11.50, trend is positive over 200-DMA

While the current year has not been great for Suzlon Energy, as the stock has shed 10 per cent so far, the underlying trend sounds nourishing a positive sentiment over the 200-weekly moving average (WMA) set at Rs 4.85 mark. 

In addition, the Moving Average Convergence Divergence (MACD) is on track to rise over the zero line, suggesting a positive bias, according to the weekly chart.

There is a bullish formation of a “Higher High, Higher Low” pattern. Having said that, only if the stock negates the 200-DMA the trend could turn negative. 

The next breakout rally shall be over Rs 11.50, the hurdle that hindered the overall bullishness for the stock carried post the Covid-19 pandemic.

The immediate support for the stock is seen at Rs 6 and the volume set-up exhibits an accumulation phase if the stock retraces to the same. CLICK HERE FOR THE CHART