CDSL shares rose 160% from 52-week low; can they recover from recent losses?

Shares of Central Depository Services (India) Ltd (CDSL), which turned ex-bonus on August 23 have surged 160% from their 52-week low. The stock, which fell to a 52 week low of Rs 553.68 on September 1, 2023 closed at Rs 1,435 on Friday, rising 159.17% in a year.  

However, the stock fell nearly 7% or Rs 103 last week after it turned ex-bonus. The CDSL stock hit a record high of Rs 1664.40 in the same session on August 23. In the last session, the stock ended 0.25% higher at Rs 1435 against the previous close of Rs 1431.40 on NSE. The stock is not listed on BSE. 

In six months, the stock has risen 52% and gained 59% this year. Total 45.53 lakh shares of the firm changed hands amounting to a turnover of Rs 656.17 crore. The stock has a beta of 1, indicating average volatility in a year. Market cap of the firm rose to Rs 29,991 crore. 

In terms of technicals, the relative strength index (RSI) of CDSL stands at 60, signaling it's trading neither in the overbought nor in the oversold territory. 

The stock has a beta of 1 indicating average volatility in a year. 

Om Mehra, Technical Analyst, SAMCO Securities said, "CDSL is currently trading at Rs 1,434.90, after peaking at Rs 1,664.40 on August 23. Since reaching this high, the stock has undergone a correction. The weekly chart has formed a dark cloud cover pattern, typically viewed as a bearish signal; however, the primary trend remains positive. The diminishing daily trading volume suggests the potential for consolidation in the near term. The stock is still within a rising wedge pattern. A correction towards Rs 1,335, which aligns with the 50% Fibonacci retracement and the 20 DMA, could offer a crucial support level. The weekly RSI is stable at 67, while the daily RSI stands at 60, both pointing to a generally positive outlook. Should CDSL cross and sustain above the Rs 1,510 level, the stock could potentially rally towards the Rs 1,800 level."

Jigar S Patel, manager at Anand Rathi expects the stock to trade in a range of Rs 1350 and Rs 1550 in the short-term. 

"Support will be at Rs 1400 and resistance at Rs  1485. A decisive close above the Rs 1485 level may trigger a further upside to 1550," said Patel  

Kushal Gandhi, Technical Analyst, StoxBox said, "The price action of CDSL succumbed to profit booking from the life highs of Rs 1664 and has retraced to its shorter-term moving average acting as immediate support. However, the relative strength index on the daily and higher timeframe indicates potential signs of momentum waning. The confirmation of trend continuation comes on a decisive close above Rs 1665. We thus recommend avoiding buying CDSL at the prevailing market price."

CDSL shares turned ex-bonus in a ratio of 1:1 on August 23. After the stock turned ex-bonus, the CDSL stock rose over to its 52-week high of Rs 1664.40 on NSE. The CDSL board announced its first ever bonus issue of shares in July this year. 

The bonus shares will be issued within two months from the date of the board approval, i.e. on or before September 1, 2024, the company said in July.

CDSL clocked a 82% rise in net profit for the quarter ended June 2024. Profit climbed to Rs 134.20 crore in the last quarter compared to the Rs 73.57 crore profit in the corresponding quarter of the previous year. Revenue in Q1 surged 72% to Rs 257.38 crore from Rs 149.68 crore in the same quarter last year.

Central Depository Services (India) is a Depository registered with SEBI. CDSL was set up with the objective of providing convenient dependable and secure depository at affordable cost to all market participants.