Godrej Consumer Products (GodrejCP) jumped by 20% Godrej as the company appoints new MD & CEO and reports decent rise in net profits. The FMCG major reported a 59.13 percent increase in its consolidated net profit to Rs 365.84 crore for the fourth quarter ended March 2021. The company had posted a net profit of Rs 229.90 crore in the January-March quarter a year ago.
The above is the news that one can find giving the logical reasoning on why the stock rallied sharply. But was it predictable before this move happened. We published the monthly research report on 10th May 2021 covering outlook on this stock on basis of Elliott Wave.
At that time it was quoting around 700 levels and as of now it is trading above 860. This simply shows that old wallstreet adage “Buy on Rumors and Sell on News” is perfectly valid. We recommended this in monthly research on basis of research. Below is the chart published on 10th May 2021 in “The Financial Waves Monthly Update”
Godrej CP Monthly chart:
Following research was published before the move of 20% happened on this stock:
Godrej CP made a life time high near 978 levels in last quarter of 2018 and completed larger degree primary wave . Since then the stock has witnessed a retracement on downside. This correction is in the form of primary degree wave . Internal structure of the same indicates that it has taken shape of Complex Correction Pattern as marked by w-x-y-x-z. From the lows it managed to recover sharply and crossed above the previous pivot high near 770 levels. Post that from last few months prices are into consolidation mode and looks to be sustaining above the crucial support levels. This price action increases the odd that wave  might have completed near the lows and next leg on upside has started in form of wave .
The important thing to witness is that it has taken support of the upward moving trendline which is connecting prior intermediate lows very well. Along with the same MACD also gave positive crossover signal after many months and moved above 0 levels. This indicates that downside trend which started from the highs has completed and now prices can generate upside momentum in coming period. Apart from that few months back stock took support near the Ichimoku Cloud zone very well and as of now managing to sustain in green clouds which hints towards positive momentum.
Also overall structure suggests that ‘Inverse Head and Shoulder pattern’ is under formation and as of now right shoulder looks to be under formation. This is classical reversal pattern which occurs when downtrend is in final stages. Nevertheless we need to wait for positive price confirmation above neckline of the pattern.
In a nutshell Godrej CP seems to be in final stages of downside correction. Positive confirmation of the same we will obtain above …………….
Happened: The stock rallied sharply higher by more than 20% in single day. Various techniques like Ichimoku Cloud, Elliott Wave, Inverse Head & Shoulder pattern all were in sync precisely.
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