Asian Paints has displayed a notable pattern on its weekly chart, characterized by a pole and flag formation. Although the price broke below the flag pattern, it failed to sustain significant follow-up selling pressure. Presently, the stock is traversing within the golden reversal zone (Fibonacci Retracement 113% - 127%), indicating a potential liquidity sweep orchestrated by smart money investors.
Moreover, the price action aligns with the completion of an ABC correction pattern within the Elliott Wave structure. This suggests a probable uptrend, targeting a 20% - 22% upside trajectory. A plausible support level lies around 2800, while prudent traders should establish stop-loss orders at 2685, with investors setting theirs at 2500.
Asian Paints boasts strong fundamentals, despite recent market turbulence triggered by news of new entrants in its business segment. While this may introduce heightened competition, it also signifies a burgeoning market landscape in India and other developing nations. Furthermore, Asian Paints is diversifying its offerings into segments like bathroom fittings, interiors, and furniture, indicating a strategic expansion beyond its traditional domain.
In light of these factors, I maintain a fundamentally positive stance on Asian Paints. Hence, I advocate a "BUY" recommendation, anticipating a 20% - 22% upside potential from current levels, with a tight stop-loss set at 3%.