Record High, Daily Gain, and Weekly Loss For Zomato Share Price. What’s Happening?

Summary:
• Zomato share price rose to record highs this week and is up by more than 111 percent year-to-date. But is its weekly loss a red flag?

Zomato share price edged up on Friday, propelled by news of a decision to shut down its “Legends” service. The Indian food delivery giant also made headlines this week following a deal to acquire Paytm’s movie ticketing business. Zomato (NSE: ZOMATO) closed at +1.8 percent and traded at Rs 262.65, and went on to add 0.3 percent in the post-market session.

Zomato’s upbeat sentiment and an action-packed week

Despite its headline-grabbing news, Zomato snapped a four-week winning run, ironically in the same week it hit record a high price of Rs 280.90. That said, Zomato shares have been on a steady ascent since early June, with only one red candlestick on the weekly chart.

Furthermore, it has gained 20.1 percent in the last month, is up by 111 percent year-to-date and 174.3 percent in the last 52 weeks. These figures point to a stock with a strong bullish momentum, certainly not threatened by a selloff. Therefore, we are likely to see stable gains in the near and the medium-term.

Zomato acquired Paytm’s entertainment ticketing arm for Rs 2,048 crore ($244 million), positioning itself to take on market leader, BookMyShow. India’s film and liveshow industry is valued at over $26 billion, making it a major market. Therefore, Zomato’s succes in that front could be far-reaching. Meanwhile, shutting down Legends is evidently a cost-cutting measure.

Momentum indicators

The 4-hour chart shows us that the buyers currently have the upper hand. Zoomato’s share price has recovered to break above the middle Bollinger Band, after having momentarily traded below that level for the first time since late July. Also, the RSI is at 57, adding support to the bullish view.

Support and resistance levels

On the chart below, Zomato share price looks set to head up if the buyers keep it above the 260.25 pivot mark. With the upside momentum, the first resistance could come at 264.50. However, if the buyers manage to extend their control, they could break above that level and test 270.00.

Conversely, moving below 260.25 will signal control by the sellers, with the first support potentially being established at 256.45. However, extended control could enable them to strengthen the downside momentum, break the first support and invalidate the upside narrative. Furthermore, it could extend losses to test the second support at 250.70.