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Chart Check: After 30% in a month, should investors buy, sell or hold this smallcap stock?

Byadmin

Jan 26, 2023


, part of the capital goods sector, has rallied more than 30% in the last month to hit a fresh 52-week high in January 2023, but technical indicators suggest that the rally may not be over yet.

The stock which is part of the S&P BSE Smallcap index rose from Rs 450 as on 23 December 2022 to Rs 619 recorded on 23 January 2023 which translates into an upside of 38%.

The smallcap stock hit a fresh 52-week high of Rs 628 on 19 January 2023. It rose more than 4% in a week and over 40% in the last 3 months.

The recent price action helped the stock the breakout from a Pennant formation on the weekly charts. Pennant is similar to a symmetrical triangle but with few differences.

A pennant is usually formed in a much smaller time frame, say 10-15 days. Pennant can be created by a simple convergence of straight lines matching the highs and lows of intervening bars. Also Read

https://economictimes.indiatimes.com/markets/stocks/news/pennant-and-wedges/articleshow/70797785.cms

image (4) (2)Agencies

In terms of price action, the stock is trading well above most of the crucial short and long term moving averages such as 5,10,30,50,100 and 200-DMA which is a positive sign for the bulls.

The Relative Strength Index (RSI) is at 73.4. RSI above 70 is considered overbought. This implies that stock may show pullback. MACD is above its center and signal line, this is a bullish indicator.

“The stock price of Surya Roshni started its up move from Rs 60 (April 2020) to Rs 861 (Oct 2021) making a series of higher tops and higher bottoms, supported by volumes,” Bharat Gala, President – Technical Research,

Securities, said.

“During the move, the stock continuously traded above averages. Thereafter, the stock was corrected to Rs 333 in August 2022. The stock traded in a range (Rs 300-600) from November 2021 to December 2022 and has recently formed four positive weekly candles,” he said.

“A Pennant pattern breakout is visible in the stock. Recently, the stock made a high of Rs 629, above the recent swing high. The Aroon Up/Down, MACD & KST Indicators indicate buying strength in the stock,” highlighted Gala.

“The possible targets are Rs 800-1,000. If the stock price corrects downwards the buy levels are Rs 585-558-537-515-503. A stop loss to be observed in the trade is Rs 480,” he recommends.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)