British American Tobacco PLC 

British American Tobacco PLC (LON: BATS) is a holding company that manufactures and sells cigarettes, tobacco, and nicotine products. It is the largest tobacco company in the world in terms of net sales as of 2019. The company operates in around 180 countries with brand names include Dunhill, Kent, Lucky Strike, Pall Mall, and Rothmans.

As per our previous recommendation on BATS as on March 30, 2021, we recommended a ‘Buy’ rating on the stock at GBX 2713.50 from the technical analysis standpoint. Stock made a high of GBX 2914.50 on April 19, 2021 and witnessed an upside gain of ~7.41 percent from the recommended entry-level. Post that prices entered the correction phase and currently, hovering around a downward sloping trend line support level. Considering the recent price action and technical indicators analysis, we are of the view that the stock may again catch an upward direction and hence recommending a ‘Hold’ rating on the stock for the next couple of sessions (1-2 weeks) at the close price of GBX 2626 (as on April 29, 2021). The summary of our previous ‘Buy’ rating, revised target levels, and price movement since the previous recommendation for BATS is provided as below:

Price Action Analysis (on the Weekly Chart)

BATS’ prices broke a symmetrical triangle pattern by the upside on March 17, 2021, around GBX 2740 level. Prices sustained above the breakout level for a month and recently started to move downside. Currently, prices are hovering around the upper band of the triangle pattern, which is acting as a support level for the stock. Prices are again expected the catch an upward direction and may test the resistance level of GBX 3310 by the upside.  

On the weekly chart, RSI (14-period) is trading at ~45 levels and indicating a neutral trend for the stock. The CMP is below the 21-period and 50-period SMA with a narrow margin and acting as immediate resistance levels for the stock.

Conclusion:

Based on the above-mentioned price action and technical indicators analysis, we can conclude that British American Tobacco PLC is still looking technically well-placed on the chart and we recommend a ‘Hold’ rating on the stock at the close price of GBX 2626 (as on April 29, 2021). 

Note: How to Read the Charts?

The Green colour line reflects the 21-period moving average while the red line indicates the 50- period moving average. SMA helps to identify existing price trend. If the prices are trading above the 21-period and 50-period moving average, then it shows prices are currently trading in a bullish trend.

The Black 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.

The Blue colour bars in the chart’s lower segment show the volume of the stock. The volume is the number of shares that changed hands during a given day. Stocks with high volumes are more liquid than stocks with lesser volume and we consider stocks with greater than or equal to 200,000 volumes as more liquid. Liquidity in stocks helps in easier and faster execution of the order.

The Orange colour lines are the trend lines drawn by connecting two or more price points and used for trend identification purposes. The trend line also acts as a line of support and resistance.

A trailing stop-loss is a modification of stop-loss in case of favourable movement in the price to protect the gains. We suggest Investors to Trail the Stop-Loss as per the aforementioned levels if the stock price achieves more than 50% of the Target 1. Investors should consider exiting from the position as per the Trailing Stop-Loss level if the price starts moving downwards after achieving more than 50% of the Target 1.

The reference date for all price data, volumes, technical indicators, support, and resistance levels is April 29, 2021. 

Abbreviations

CMP: Current Market Price

SMA: Simple Moving Average

GBP: British pound sterling

GBX: British pence sterling

RSI: Relative Strength Index 

Note: Trading decisions require a thorough analysis by investors. Technical reports in general chart out metrics that may be assessed by investors before any stock evaluation. The above are illustrative analytical factors used for evaluating the stocks; other parameters can be looked at along with additional risks per se. Past performance is neither an indicator nor a guarantee of future performance.

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