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As the markets have taken a U-turn from the lower levels and the small and mid-cap spaces are still clocking higher highs, investors’ risk appetite has risen. One stock that they are currently focusing on is Birla Corporation Ltd (NS:) which is a manufacturer of cement, jute, PVC flooring, etc., having a market capitalization of INR 9,548 crore.
After facing very stiff resistance at around INR 1,255 from mid-June 2023 to the first week of August 2023, the stock fell sharply to a low of INR 1,060.55, on 16 August 2023. Although this fall clearly depicted high selling pressure and investors’ keen interest in liquidating their holdings, the equally sharp rally that followed shortly completely changed the sentiments of investors.
Image Description: Daily chart of Birla Corporation with volume bars at the bottom
Image Source: Investing.com
This move can be seen as a V-shaped bottom in which the stock falls sharply and rises at almost the same pace, leaving a V-shaped pattern on the chart. While a much smoother rounding bottom is preferred for a reversal, this pattern is also helpful in determining the future trajectory of the stock.
Today, the stock jumped over 4.5% to 1,297, by 10:35 AM IST and soared above the resistance of INR 1,255 that was keeping it from rising in the previous months. This is a breakout and the uptrend has gotten a new push.
This is too early to gauge the volume figures, but the stock managed to garner a volume of 195.7K shares so far, which is over 120% higher than the 10-day average volume of 88.7K shares. Not a bad start!
Now, traders looking to capitalize on this long opportunity can eye for the levels of around INR 1,430. There are no prominent resistance levels till this one but conservative traders can also keep trailing their stop loss in case they can’t hold on for this long.
Webinar: How to catch potential midcaps before they turn to large caps
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