The company announced it would pass on GST tax cuts to customers, making two-thirds of its products cheaper. The analyst believes that a breakout past ₹1,423 could signal a bullish reversal.
Raymond Lifestyle’s stock jumped about 6% in morning trade on Tuesday after the company announced it would pass on the GST tax cuts to customers.
SEBI-registered analyst A&Y Market Research has highlighted that the stock is approaching a crucial resistance zone. A breakout could change the trend bias to bullish, while rejection might lead to a move towards the support zone.
The GST Impact
From September 22, prices of many Raymond apparel items will be reduced, as the GST on clothes under ₹2,500 has been cut from 12% to 5%.
SEBI-registered analyst A&Y Market Research noted that this was a significant because two-thirds of Raymond’s products fall in this price range. The company believes that while prices will go down, higher sales volumes will make up for any revenue loss. Raymond Lifestyle’s CFO is confident that more affordable pricing will attract more buyers and boost overall growth.
The analyst also highlighted that Raymond is planning to adjust the pricing of some clothes currently just above ₹2,500 to bring them under the lower tax bracket. This gives them a strong edge over global premium brands, which don’t benefit from this GST cut, according to them.
Technical Watch
They identified a resistance zone for Raymond Lifestyle stock between ₹1,387-₹1,423, with support at ₹1,100-₹1,125.
A breakout above ₹1,387-₹1,423 could lead to a potential trend reversal and upside movement. On the other hand, a rejection at these levels could lead to a pullback towards the support zone. They noted that a formation of a double bottom pattern indicates potential bullish sentiment.
What Is The Retail Mood?
Data on Stocktwits shows that retail sentiment has flipped from ‘extremely bearish’ to ‘bullish’ a day ago amid ‘very high’ message volumes.
Raymond Lifestyle shares have declined nearly 40% year-to-date (YTD).
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