Thermax Ltd: Heating up with breakout momentum

Thermax Ltd., a leading provider of engineering solutions to the energy and environment sectors, is poised for a significant uptrend as it breaks free from a complex consolidation phase. Founded by A S Bhathena in 1966, the company operates across three segments: Energy, Environment, and Chemical, offering a range of solutions from process heating to air pollution control.

Technical analysis

In early October 2023, Thermax initiated a retracement phase after reaching a high of Rs 3,230, marking the beginning of a 4-month consolidation period characterized by an impulse structure. Amidst this consolidation, the stock found solid support at Rs 2,501, a key Fibonacci support level of 50%, and the 200DMA level, completing a complex correction wave structure before entering the next impulse phase.

The pivotal point in Thermax’s recent journey is the emergence of a significant breakout trendline, connecting the high point of October 03, 2023 (Rs 3230) with the peak of January 05, 2024 (Rs 3268). This technical continuation pattern unfolded over 4 months, and recent trading sessions suggest a potential shift in the narrative.

Stock performance

In the current weekly trading session, Thermax share experienced a surge of more than 10%, accompanied by above-average trading volumes. Today’s trading session witnessed a 4.41% rally, reaching a day high of Rs 3,364.20, surpassing the breakout trendline at Rs 3,285 with substantial volumes of 156.65 million shares. This trading action indicates a potential continuation of the trend, with a weekly closing above the breakout trendline at Rs 3285 providing the final confirmation.

Future outlook

With a potential target set at Rs 4,000, representing a gain of more than 21% from the breakout threshold at Rs 3,285, this scenario presents an enticing opportunity for swing traders and investors alike. The company’s trajectory offers a promising outlook, brimming with potential for further upward gains.

As Thermax breaks free from its continuation pattern, investors are advised to closely monitor its performance. The exciting prospects it presents in the evolving landscape make Thermax a stock to watch for those recognizing the potential for significant growth in the energy and environment sectors.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.