Avic Chengdu share price trades lower as Middle East tensions fizzle out; more pain ahead?
At the peak of the Iran-Israel tensions, Avic Chengdu Aircraft's share price had risen to 90.30 yuan. But since then the Chinese defence stock has lost over 8% of its value as of today, July 7. From a technical perspective, too, Avic Chengdu stock has seen failed attempts to break out, thus weakening the sentiment in the stock, as per an expert.
While the J-10 fighter jet maker's stock initially rallied on the news amid a relief rally in Chinese stocks following the ease in Middle East tensions, the stock soon took a backseat.
The shares of Avic Chengdu had caught the limelight during the peak of the India-Pakistan conflict, when the latter had deployed Chinese-made J-10 fighter jets against India.
In the last five sessions, Avic Chengdu share price has declined in four sessions, barring Friday (July 4). For the month, the Chinese defence stock is down 5%, taking a breather after a 14.5% rally in June and 31% gains in March.
According to Anshul Jain, Head of Research at Lakshmishree Investments, AVIC Chengdu has seen two failed breakout attempts and is still shaping a VCP (volatility contraction pattern) on the daily charts, now spanning 33 days. The repeated failures and weakening volume pattern are red flags for bulls, he added.
"Only a sustained move above 95 can revive bullish momentum and attract fresh buying interest. On the flip side, any close below 75 will likely trigger a breakdown, opening the way for the stock to drift towards the 60 level," Jain said, while telling investors to exercise caution at the current juncture.
Disclaimer: This story is for educational purposes only. The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
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