While the mood of the broader markets is not so good, one penny stock that is turning heads on the street is Vikas Lifecare Ltd (NS:). It is a specialty chemicals company with a market capitalization of INR 459 crore. It turned to losses in FY23 with a net outflow of INR 15.29 crore, compared to a profit of INR 28.7 crore in FY22.

As it is a penny stock, it should solely be looked at for trading purposes, not for investing. Also, traders with a low-risk appetite and less capital should not dwell in the penny stock space due to very high risks.

Image Description: Daily chart of Vikas Lifecare with volume bars at the bottom

Image Source: Investing.com

The stock had been moving in a range since mid-June 2023. The highs of the stock kept on decreasing while the lows remained at almost the same levels, depicting a consistent demand from the lower end of the range, despite increasing selling pressure from the top (which results in lower consequent peaks).

This entire price action took the form of a descending triangle chart pattern on the daily time frame, the breakout from which has been witnessed today. The stock has finally decided to come out of this range and is now moving in an upward trajectory without much resistance. The nearest trendline resistance of around INR 3.25 has been crossed today on the back of a volume of 41 million shares, which is over 402% higher than the 10-day average volume of 8.16 million shares.

Currently, the stock is trading 9.6% up at INR 3.4, by 1:55 PM IST and looking at the dimensions of the triangle pattern, a rally to the next level of INR 3.9 seems possible, which denotes a decent move of around 15%. Traders can also hold the stock beyond this level as long as the momentum is there. But keeping it in the portfolio even after the momentum fades would probably be a bad idea as such stocks should only be held till the rally is on.

The crystal clear level to place stops is below INR 3 which is a strong support level.

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