F&O: A Double Top Forming in This Large-Cap!

  • Stock Market Analysis

Although the Indian markets are more or less trading flat for the day so far, a few stocks are clearly changing their trend towards the south. One such counter is from the prestigious group Larsen & Toubro - Larsen & Toubro Ltd (NS: LART ).

It is a construction and engineering company with a market capitalization of INR 4,23,667 crore and trades at a TTM P/E ratio of 34.5. The stock has been a great investment opportunity for investors in the last one year, delivering a return of 52.2%, which is quite good considering the size of the company.

Image Description: Daily chart of Larsen & Toubro with volume bars at the bottom

Image Source: Investing.com

After this good run, the stock seems to be witnessing profit booking. Earlier, in October 2023, the stock peaked at around INR 3,100 and retraced till INR 2,860, depicting a 7.7% cut. After there, the stock again attempted to soar to a new high but eventually failed at around the level of the previous peak.

This price action translated into a famous Double Top chart pattern on the daily time frame. Although the stock is still in a broader uptrend, this pattern is a clear indication of a probable trend reversal.

Currently, the stock is trading at INR 3,044 and might easily fall to the nearest support of INR 2,860, the level from where the stock found demand the previous time. However, once this level gets breached, the trend reversal will probably be confirmed.

But here’s a fundamental view as well. As per the Q2 FY24, the stock has already hit its fair intrinsic value of INR 3,109 so there isn’t much valuation gap left for long traders to capitalize on.

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X (formerly, Twitter) - aayushxkhanna

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  • Dadasaheb Jarag @Dadasaheb Jarag
    nice
    Like 0
  • Devbroto Talukder @Devbroto Talukder
    excellent 👌
    Like 2
  • Vijay Parekh @Vijay Parekh
    sun pharma also
    Like 0
  • Pradeep Pawar @Pradeep Pawar
    yes well said,, Larsen stagnating
    Like 0
  • anand mehta @anand mehta
    good analysis
    Like 1
    • Aayush Khanna @Aayush Khanna
      @anand mehta Thanks, Anand.
      Like 0
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  • PC DOSHI @PC DOSHI
    sometimes the signals turns to be diseptives also
    Like 0
  • rajesh nasra @rajesh nasra
    Nice analysis 👍🏼
    Like 1
    • Aayush Khanna @Aayush Khanna
      @rajesh nasra Thanks, Rajesh.
      Like 0
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  • hardik patel @hardik patel
    good
    Like 1
  • anil kumar @anil kumar
    Double top at this moment is an wild and untrue guess.please post some meaningful prediction. Thank you
    Like 0
  • ravibabu avvari @ravibabu avvari
    Yes. If second Top Low goes there will be sharp fall
    Like 0

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