CDSL shares rose 132% from 52-week low but trend negative for four days; buy, sell or hold?

Shares of Central Depository Services (India) Ltd (CDSL) have more than doubled from their 52-week low in nearly a year. The stock, which fell to a 52-week low of Rs 631 on October 26 last year stood at Rs 1,468 in the current session, rising 132% during the period. 
 
At today's level, the stock is down  12% from the record high of Rs 1664.40 reached on August 23 this year. In that session, the CDSL stock price almost halved from the previous day as the stock was turned ex-bonus in a ratio of 1:1. After the stock turned ex-bonus, the CDSL stock rose to its record high. 

The CDSL board announced its first ever bonus issue of shares in July this year. 

Meanwhile, in the current session, the stock closed 2% lower at Rs 1466.50 on NSE. Tbe stock is not listed on BSE. It fell for the fourth straight session on Thursday. 

In the current session, market cap of CDSL fell to Rs 30,649.85 crore. 

In six months, the stock has risen 64% and gained 61.30% this year. Total 25 lakh shares of the firm changed hands amounting to a turnover of Rs 371.97 crore. The stock has a beta of 0.9, indicating low volatility in a year. 

In terms of technicals, the relative strength index (RSI) of CDSL stands at 61.8, signaling it's trading neither in the overbought nor in the oversold territory. 

Ameya Ranadive CMT CFTe, senior technical analyst, StoxBox sees immediate targets for the stock at Rs 1,750 and Rs 1,900. 

"CDSL has been exhibiting notable strength both fundamentally and technically. The stock has rallied recently, driven by the appointment of Nehal Vora as CEO and a 1:1 bonus share issue, alongside a strong Q1 2024 performance, which saw an 82% rise in net profit. On the technical front, the stock has shown robust momentum, with the ADX indicating strength at a level of 32.1, confirming a strong uptrend. CDSL is trading well above key moving averages. Immediate targets can be set at Rs 1,750 and Rs 1,900, provided the stock maintains its current trajectory. However, risk management is critical. A break below Rs 1,330 would negate the current bullish view, suggesting potential downside risk and warranting caution for traders."

A R Ramachandran, an independent Sebi registered analyst said, "CDSL stock price is bearish on the daily charts with strong resistance at Rs 1,568. A daily close below the support of Rs 1,475 could lead to a fall till Rs 1,348 in the near term."

Jigar S Patel, manager at Anand Rathi said, "At this point, CDSL appears to be highly overextended because it is trading significantly above all key exponential moving averages (EMAs) such as the 20, 50, 100, and 200-day EMAs. This indicates that the stock's price has surged well beyond its typical trend, suggesting that it may be due for a mean reversion, where the price could potentially pull back to align more closely with its average levels. Such a deviation makes the stock more susceptible to a correction. Therefore, investors are advised to avoid taking new long positions at the moment, as the risk of a downward correction is heightened."

CDSL reported a 82% rise in net profit for the quarter ended June 2024. Profit climbed to Rs 134.20 crore in the June 2024 quarter compared to Rs 73.57 crore profit in the corresponding quarter of the previous year. Revenue in Q1 rose 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.