Alok Industries shares up 45% in 3 sessions after Reliance funding; can this strong upmove sustain?

Shares of Alok Industries Ltd hit 10 per cent upper circuit limit of Rs 39.24 in Tuesday's trade, extending their sharp gains for the third straight session. At today's high price, the stock has gained 44.58 per cent in three trading days. And, it has marched higher during six out of seven trading sessions in January so far.

Alok Ind, in a recent BSE filing, mentioned that Reliance Industries Ltd (RIL) has infused Rs 3,300 crore through investment in Non-Convertible Redeemable Preference shares of the company. "We wish to inform you that upon receipt of subscription money of Rs 3,300 crore from RIL, the company has today allotted to RIL 3,300 crore (9 per cent) Non-Convertible Redeemable Preference shares of Re 1 each for cash at par aggregating Rs 3,300 crore, on the terms and conditions as approved by the shareholders of the company vide special resolution passed on December 23, 2023," it stated.

Bourses BSE and NSE have put the securities of Alok Industries under the short-term ASM (Additional Surveillance Measure) framework. Exchanges put stocks in short-term or long-term ASM frameworks to caution investors about high volatility in share prices.

On technical setup, support on the counter could be seen at Rs 35, followed by Rs 34, Rs 30 and Rs 29 levels. On the higher side, a decisive close above Rs 40 is required for a further upside.

"The stock has seen strong breakout above Rs 32, accompanied by huge trading volumes. One can expect a target price of Rs 45, keeping a stop loss placed at Rs 29," Akshay Bhagwat, Senior Vice-President, Derivatives Research at JM Financial Services, told Business Today TV.

"The counter has witnessed a strong breakout from Rs 30-odd level, which now should be acting as a support zone. Post the vertical rally, one must avoid complacency and wait for some cool-off towards the mentioned zone. Also, the stock has came out of the slumber phase after a very long period and hence, looks poised to continue its upward trend with some in-between corrections. One must adapt a pragmatic approach with bullish biases," said Osho Krishan, Senior Research Analyst - Technical & Derivatives at Angel One.

"Support will be at Rs 35 and resistance at Rs 40. A decisive close above Rs 40 level may trigger a further upside till Rs 44. Expected trading range will be between Rs 30 and Rs 45 for a month," said Jigar S Patel, Senior Manager - Technical Research Analyst at Anand Rathi Shares and Stock Brokers.

"Alok Industries is bullish but also very overbought on daily charts with next resistance at Rs 47.7. Investors should book profits at current levels as a daily close below support of Rs 34 could lead to Rs 26 in the near term," said AR Ramachandran from Tips2trades.

As of September 2023, promoters held 75 per cent stake in the company.

(Disclaimer: Business Today provides stock market news for informational purposes only and that should not be construed as investment advice. Readers are encouraged to consult a qualified financial advisor before making any investment decisions.)

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