Stocks

stocks to buy: Chart Check: 60% in a month! This microcap stock on bulls radar post breakout; should you buy?

Bharat Wire Ropes, part of the capital goods space, rose by over 60 per cent in a month in the last 30 days which helped the stock to move past multi-year falling trendline on the weekly charts in August.

Momentum helped the stock with a market capitalisation of less than Rs 1,000 crore to hit a fresh 52-week high of Rs 120.05 for the first time after 2018.

The stock rallied from Rs 63.90 on 22 July 2022 to Rs 107.95 on 22 August which translates into an upside of over 68 per cent in a month, BSE data showed.

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The stock started its upmove after hitting a low of around Rs 50 back in December 2021. Since then, the stock has been in an uptrend. It rose more than 22 per cent in a week and over 60 per cent in a month.

The stock is trading around overbought levels hence some consolidation cannot be ruled out, but medium-term investors can look to buy the stock now or on dips for a possible target towards Rs 180 which translates into an upside of about 50 per cent from current levels, suggest experts.

Most of the technical indicators confirm possible uptrend. Hence, any dips can be used as a buying opportunity.

Note: Considering the stock is from microcap space, traders should consider taking positions based on liquidity. . weekly average delivery volume is 46.82 per cent, Trendlyne data showed.

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On the price front, the stock is trading below the 5-DMA, but above 10,20,30,50,100 and 200-DMA which is a positive sign for the bulls.

The relative strength index (RSI) is at 72.1. RSI above 70 is considered overbought. This implies that stock may show pullback, Trendlyne data showed. MACD is above its center and signal Line, this is a bullish indicator.

The stock made a low of Rs 10.30 (April 2020) after the Covid event. The stock traded below averages which itself were trending downwards.

“Value buying followed and the stock started making higher bottom formations and made a high of Rs 92 (April 22). The stock almost gave a V shaped recovery,” Bharat Gala, President – Technical Research,

Securities, said.

“The stock always traded above averages after May 2021. Recently the stock gave a trend line (Connecting 2018-2022) breakouts and made a new high of Rs 120. The ADX, demand index and MACD indicator suggest a possible firm uptrend,” he said.

ADX measures the strength of the trend and demand index measures the ration of buying pressure to selling pressure.

Gala recommends a possible target is Rs 160-180 in next 6 months even if the stock price corrects downwards the buy levels Rs 104-95-87- 79-74. A stop loss to be observed in the trade is Rs 71, he said.

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


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