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DCW Rallies to Monthly Highs As On Renewed Demand Side Outlook

Shares of chemicals company DCW (NSE:DCW) hit new monthly highs of Rs. 62.25 on Friday before settling lower at Rs. 58.70 after an intra-day gain of 3.71%. This highlights the DCW stock’s good returns that have seen it stay on the ascending trajectory since March 15. The current rally is likely to continue being supported by a weaker Indian rupee that could favour the company’s exports.

The DCW stock has gained 8.27% since the year begun, with 14.20% in the last month contributing immensely to reversing the previous month’s loss of 17.61%. That said, the Reserve Bank of India’s decision to keep interest rates unchanged at 6.50% could strengthen the rupee against the dollar in the medium term, bringing headwinds to the export market. The RBI’s current interest rates are expected to stay until the third quarter of the year.

DCW previously faced an uphill task in the aftermath of the February earnings report that saw it lose Rs. 123.23 million year-on-year in the last quarterly report.  Nonetheless, its performance in the stock market over the last year has been nothing short of impressive. DCW has gained about 25% over the last year-a good return by all measures. This stability will likely see investors hold on to it even in the midst of a high interest rate environment.  That said, the forthcoming general elections will likely slow down gains in the near term

Technical analysis

The buyers are in control of the DCW share price, as signaled by the RSI indicator at 57. However, they will need to keep the price above 57.40 to sustain the upside. That could enable them to breach the resistance at 59.45 and set them on course to test 62.70 in extension.  In the same breath, a move below 57.40 will favour control by the sellers, who will find support at 54.60. Furthermore, a continuation of control by the sellers could build the momentum to test 51.70.