Varun Beverages: A resilient rise and a promising breakout on the horizon

Varun Beverages Ltd, a prominent force in the FMCG sector, has exhibited impressive resilience, marking a remarkable surge of more than 3.78%. This surge has positioned the company just above a significant “continuation pattern” breakout trendline.

Varun Beverages Ltd. is a major player in the manufacturing and sale of beverages, encompassing carbonated soft drinks, non-carbonated beverages, and packaged drinking water. The company operates across both Indian and international markets, with its roots dating back to its founding by Ravi Kant Jaipuria on June 16, 1995. The company’s headquarters are located in Gurugram, India. A pivotal contributor to the beverage industry, Varun Beverages Ltd. has been associated with PepsiCo since the 1990s, serving as one of the world’s largest PepsiCo franchisees. The company proudly produces and distributes an extensive array of beverages, featuring renowned PepsiCo brands such as Pepsi, Seven-up, Mirinda Orange, Mountain Dew, and Tropicana Juices.

An insightful analysis of Varun Beverages’ stock performance spanning from May 26, 2023 (Rs 873.50) to August 04, 2023 (Rs 839.05) unveils a compelling Continuation Price Pattern, suggesting the potential for a significant price movement. 

Notably, the trading activity on August 11, 2023, witnessed an impressive rally that exceeded 3.78%, accompanied by robust trading volumes surpassing 3.30 million shares. The stock successfully concluded the trading session above the breakout trendline, thereby validating the breakout.

At present, Varun Beverages Ltd. confidently trades above the breakout trendline threshold (Rs 835) at Rs 866, following an intraday peak at Rs 870. Discerning long-term investors are advised to leverage this breakout opportunity. Further confirmation of the continuation of the technical price pattern is evident through follow-up buying in subsequent trading sessions. The potential target of this pattern hovers around Rs 1085, signifying a remarkable surge of over 30% from the breakout level.

Enhancing the bullish outlook, the 14-week relative strength index (RSI) positions itself comfortably within the bullish zone, hovering around 70.5, indicating the company’s favourable standing. Coupled with the robust momentum suggested by short-term key moving averages, both momentum traders and long-term investors are poised to consider Varun Beverages Ltd. as an enticing contender for strategic inclusion in the upcoming trading sessions.

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.