Mazagon Dock shares in bear grip since two months, will profit-booking continue? 

Shares of Mazagon Dock Shipbuilders are under pressure in the last two months. The multibagger stock, which closed at Rs 1,893 on March 14, 2024 hit a record high of Rs 5,860 on July 5, rising 209% in four months. However, the stock has lost 27% from record high till date. Currently, the defence stock is undergoing a protracted consolidation in terms of both time and price, said an analyst. 

The multibagger stock was trading at Rs 4296 in the current session. It hit an intraday high of Rs 4349.10 today with the market cap of the firm at Rs 86,621 crore.

Total 0.26 lakh shares of the firm changed hands amounting to a turnover of Rs 11.25 crore. Mazagon Dock shares have a one-year beta of 1.4, indicating very high volatility during the period. 

In terms of technicals, the relative strength index (RSI) of Mazagon Dock stands at 43.3, signaling it's trading neither in the overbought nor in the oversold zone. Mazagon Dock shares are trading lower than the 5 day, 10 day, 20 day, 30 day, 50 day but higher than the 100 day, 150 day and 200 day moving averages.

Most analysts said the outlook of the stock looked bearish in the short term

Laxmikant Shukla, Technical Research Analyst at YES Securities is bullish on the stock. Resistance of the stock lies at Rs 5,330 and support is seen at Rs 4,300.

“Mazagon Dock has recently demonstrated a descending trendline breakout after consolidation and is currently trading comfortably above 100 and 20 SMA on the daily chart. Daily RSI has given a bullish crossover on the daily chart reinforcing the given breakout. The overall trend appears to be upward and minor upcoming fluctuations are likely to provide a favorable environment for buyers. We recommend Buying Mazdock on dip around Rs 4,700-4,730, keeping a stop loss of Rs 4,300 for a potential target of Rs 5,330,” said Shukla.

Gaurav Bissa, VP, InCred Equities said , “Mazagon Dock had a brilliant run since 2022. However, it has witnessed a decent correction from a 2-year rising channel resistance on the weekly charts. It has fallen about 30 percent from top and currently trading below the median line of the channel suggesting the short term view remains challenging. It may see some stability on account of the price being near its 89 EMA on the daily charts along with RSI near support zone. Investors are advised to hold their positions whereas long term investment is advised on a move below Rs 4000 levels. Traders are advised to buy around Rs 4120 levels for 10-15 percent upside."

Jigar S Patel from Anand Rathi sees support for the stock at Rs 4,040 and resistance at Rs 4,500. “A decisive close above the Rs 4500 level may trigger a further upside to Rs 4700. The expected trading range will be between Rs 4000 and Rs 4700 for the short-term,” said Patel.

Ameya Ranadive, CMT CFTe, Sr Technical Analyst, StoxBox said, “Mazagon Dock Shipbuilders is currently quoting at Rs 4,289, undergoing a phase of profit-booking. Over the last 2.5 months, the stock has corrected by approximately 25% from its recent highs. The current market positioning also reflects inherent weakness, with prices trading below the critical 20-day and 50-day Exponential Moving Averages (EMA), signaling short-term bearish sentiment.

At present, Mazagon Dock finds itself in a technical no-trade zone. Strategic accumulation should be considered only upon a further decline toward the key support band between Rs 4,150 and Rs 4,100, provided the price stabilizes at these levels over several trading sessions. A mean-reversion trade may then be viable, with long positions warranted, contingent on maintaining a stop-loss just beneath the 100-day EMA.For mid-term prospects, the stock offers potential upward targets in the range of Rs 4,750 to Rs 4,900, subject to a reversal in current sentiment. However, this view would be invalidated if the price breaches the critical Rs 3,800 level, at which point further downside risk would emerge.”

Mandar Bhojane, Equity Research Analyst, Choice Broking said, "Mazagon Dock is currently trading around Rs 4,283, having corrected nearly 25-30% from its all-time high, which suggests that the stock is in a correction phase. If we observe a bullish reversal around the Rs 4,044 level or the Rs 3,344 level—where the 100-day and 200-day EMAs are located—these levels could present fresh buying opportunities for investors targeting Rs 5,200 and Rs 5,600 in the short term. If the price closes above the Rs 4,600 level, the stock could further rally toward the Rs 5,200 and Rs 5,600 levels. The immediate support is at Rs 3,800. The RSI is currently trading at 42.68 and it is near the oversold region, indicating a potential bullish reversal. Therefore, it is advisable to consider buying on dips, particularly around Rs 3,800 and Rs 3,500, to capitalise on potential retracements in the stock price. To manage risk prudently, a stop-loss at Rs 2,950 is recommended. This measure is crucial to safeguard investments in the event of an unexpected market reversal."