Escorts, M&M: Tractor stocks could see 20-30% upside, charts suggest

Tractor stocks such as M&M and Escorts are indicating a bullish outlook for coming sessions

 Auto stocks came under investors' radar on Friday as original equipment manufacturers (OEMs) began reporting sales figures for the month of December. Nifty Auto index was ruling near day's high, up 0.6 per cent at 9,251.75 levels, at 10:50 am as against a 0.35-per cent rise in the Nifty50 index.

Among individual stocks, shares of Escorts advanced 4 per cent at Rs 1,310 on the BSE in early morning trade on Friday after the company registered a strong 88 per cent year-on-year (YoY) growth in tractor sales at 7,733 units for the month of December. The tractor sales during the month were the company's highest-ever for the month of December. READ MORE

That apart, another tractor player, M&M, was trading as the top sectoral gainer on the NSE in late morning deals, advancing 2.6 per cent on the National Stock Exchange.

Analysts at Nirmal Bang Institutional Equities expect tractor firms to continue posting strong sales numbers as demand continues to remain healthy on account of good Rabi sowing. Moreover, inventory continues to remain lower than normal level, they said in a report dated December 30.

So how should you trade related stocks ahead of sales data? Here's what charts say: 
 

Escorts Ltd (ESCORTS): The stock is attempting to conquer its 50-days moving average (DMA), located at Rs 1,321 levels while taking support of 100-DMA at Rs 1,258 levels. The momentum and strength seem to be on the side of the bulls as the Relative Strength Index (RSI) has crossed the resistance of 43 value with a positive crossover. While the volume structure appears to be sideways, buying interest may resume if the stock manages to cross Rs 1,321 resistance. CLICK HERE FOR THE CHART
 
Mahindra & Mahindra Ltd (M&M): The counter is well placed above the 200-weekly moving average (WMA) placed at Rs 640 levels. Investors bought into the recent dip, which was seen around the support of 200-DMA levels. The stock has formed a "Inverse Head and Shoulder" pattern. The current scenario exhibits a positive trend towards the breakout Rs 790 - 800 levels. If the stock surpasses this level then it may see a sharp upside towards Rs 850 levels. CLICK HERE FOR THE CHART
 
V.S.T Tillers Tractors Limited (VSTTILLERS): The stock needs to decisively cross and sustain above the resistance of Rs 2,000 levels to trigger a fresh leg of rally. If that happens, the stock may move towards Rs 2,200 and Rs 2,500 levels. The immediate support comes at Rs 50-DMA, placed at Rs 1,827 levels. The medium-term outlook looks promising till the stock holds ground above the support of Rs 1,800 levels. CLICK HERE FOR THE CHART