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The broader markets have started the week with some recovery as the benchmark index is trading 0.16% up at 19,296, by 9:44 AM IST. Going by the trend of the last few weeks, the small and mid-cap counters are outperforming their larger peers which seems to be the case on Monday as well.
From the small-cap pocket, one stock that should be on the watchlist of bulls for a slightly longer-term perspective is Indiabulls Real Estate (NS:). It is an Indiabulls Group company that is engaged in the development of real estate and allied services, having a market capitalization of INR 3,871 crore.
Image Description: Weekly chart of Indiabulls Real Estate with volume bars at the bottom
Image Source: Investing.com
On the technical front, the stock broke out of the resistance of a symmetrical triangle chart pattern on the weekly time frame, on Friday. This is a volatility contraction pattern and is known to propel the stock in the direction of the breakout/breakdown. More importantly, the resistance break has been witnessed on the weekly chart, which makes it more reliable than had the breakout occurred on a smaller time frame, such as the daily.
The breakout came on Friday, and today’s follow-up move has confirmed the upside trend for the near future. The initial level that can be expected on the back of increasing investors’ demand is around INR 93.5 – INR 94, denoting a decent upside potential of around 27% from the CMP of INR 73.95. However, as this analysis is done on the weekly chart, the levels might take their own sweet time to come.
Managing risks, especially in the small-cap space is extremely important while trading in the stock market. Therefore, traders can look at the level of INR 62.6 to place their stop-loss order. This is below the lower trendline support of the triangle and therefore seems apt.
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