Trump slaps 30% tariffs on EU, Mexico
Stocktwits - After a sharp multi-week rally, Garden Reach Shipbuilders (NSE:GRSE) & Engineers (GRSE.NSE) may be entering a phase of consolidation or pullback, with early technical signals pointing to a potential mean reversion, said SEBI-registered analyst Rajneesh Sharma.
Sharma added that although the long-term trend remains bullish, multiple technical indicators point to a potential consolidation or short-term pullback.
Sharma noted that the stock continues to trade within a long-term upward channel but formed a clear shooting star pattern last week, signaling bearish rejection.
It faced strong resistance near the upper trendline around ₹3,400 and closed down sharply at 4.72%, marking the first clear sign of profit booking at higher levels.
The analyst said that the stock is currently trading nearly 50% above its 20-week exponential moving average (EMA), a gap that is typically unsustainable.
Historically, such steep extensions often lead to mean reversion through sideways consolidation or a pullback toward short-term support levels, Sharma stated. The steep slope of the recent rally is likely to result in some cooling off.
The Relative Strength Index (RSI), an indicator to identify overbought or oversold conditions in a stock, is currently at 74.16, indicating a strong overbought zone.
Sharma pointed out a subtle bearish divergence, where the price reached a new high but the RSI failed to follow, an early sign of weakening momentum that increases the chances of a short-term pullback or sideways movement.
Sharma noted that although strong volumes supported the breakout, the recent rejection came on slightly lower volume, suggesting profit booking rather than a significant sell-off. He added that the stock is likely undergoing a healthy consolidation phase rather than a structural trend reversal.
A blistering year-to-date rally saw GRSE stock gain over 92% as of Wednesday’s close, but profit booking in the past four sessions has seen the shares slide around 9%.
At the time of writing, GRSE stock was down 2.1% at ₹3,034 per share.
For updates and corrections, email newsroom[at]stocktwits[dot]com