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Highlights
- Blackmores Limited (ASX:BKL) develops and markets herbal and mineral nutritional supplements for both humans and animals.
- BKL shares have gained nearly 9% in a month, compared to only 2.5% gains in the ASX 200 index.
- BKL shares witnessed correction, which continued till March end, following the announcement its 1H FY23 results on 23 Feb 2023.
The last one month has been quite encouraging for Blackmores Limited (ASX: BKL), which develops and markets herbal and mineral nutritional supplements for both humans and animals. The stock has appreciated nearly 9% in this time frame, compared to only 2.5% gains in the ASX 200 index.
BKL shares have witnessed a rebound this month following the correction witnessed in the stock post announcement of its 1H FY23 results on 23 Feb 2023. This correction continued till the end of March 2023 and dragged the stock nearly 20% lower from levels of AU$ 85 seen on 20 February 2023.
This correction came despite Blackmores reporting a 17% increase in its underlying net profit at AU$ 24.4 million and increasing its interim dividend by 38% to 87 AU cents.
In 1H FY23, Blackmores' revenue declined by 1.6% annually to AU$ 338 million, while its gross margin fell marginally to 53.3% from 53.9% in pcp due to the impact of inflation.
Probably, what weighed on the stock is the management commentary that said the near-term outlook was "somewhat uncertain" because of the impact of rising inflation and interest rates on consumer spending.
However, looking at the share price movement of BKL this month so far, it seems as if market participants have shrugged off the inflation worries. Let’s analyse the technical charts of BKL to get an idea of where the stock is moving.
BKL’s Price Action Analysis (on the Weekly Chart)
On the weekly chart, BKL shares have managed to sustain above the downward-sloping trendline support level and continuously taking support from the trendline, indicating the possibility of a pullback. Now, the stock could head toward its next resistance level at AU$ 89.00 and in the short term (2-4 weeks), prices may test this level. If BKL manages to break above the near-term resistance of AU$ 89.00 level with decent volumes, then the next level of AU$ 95.00 may be seen in the stock.
Technical Indicators Analysis (On the Weekly Chart)
On the weekly chart, RSI (14-period) is moving in a positive zone and showing a reading of ~53.78 level, indicating positive price momentum. The CMP is trading above its 21-period and 50-period SMA, which is acting as immediate support for the stock. Moreover, the weekly volumes also seem supportive of the upside movement.
Note 1: Past performance is neither an Indicator nor a guarantee of future performance.
Technical Indicators Defined:
Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.
Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock.
Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.
The Green colour line reflects the 21-period moving average. SMA helps to identify existing price trends. If the prices are trading above the 21-period, prices are currently in a bullish trend (Vice – Versa).
The Blue colour line reflects the 50-period moving average. SMA helps to identify existing price trends. If the prices are trading above the 50-period, prices are currently in a bullish trend (Vice – Versa).
The Orange/ Yellow colour line represents the Trendline.
The Purple colour line in the chart’s lower segment reflects the Relative Strength Index (14-Period), which indicates price momentum and signals momentum in trend. A reading of 70 or above suggests overbought status, while a reading of 30 or below suggests an oversold status.
Disclaimer
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