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Despite a visible weakness in the broader markets, the share price of telecom player Vodafone Idea Ltd (NS:) is on a roll. This telco has a market capitalization of INR 57,685 crore and its stock has delivered a great return of 54% in the quarter ended September 2023.
Since the last few weeks, the stock has been trading in an almost perfect range. This tussle between bulls and bears had created a stiff resistance of INR 12.5 on the upside and support of INR 10.5 on the downside. The stock kept bouncing off between these levels for a good while now.
Image Description: Daily chart of Vodafone Idea with volume bars at the bottom
Image Source: Investing.com
This kind of price action represents an equilibrium in market forces of demand and supply and is often called volatility contraction. Once this range gets breached, the stock gears up to rally/fall in that direction, which is what exactly happening in Vodafone Idea.
Today, the stock jumped 6.3% to INR 12.6 and surged past the resistance in style, a strong bullish indication. This level also marks the new 52-week high which is also a bullish signal. Hence, bears might not get a chance to pounce on this stock from here on, and long holders might be able to squeeze some profits out of the impending rally.
As per the height of the range, the stock now holds the potential to rally to INR 14.5 in the near future and conservative traders can maintain a stop loss below the support of the range.
However, it should also be noted, that Vodafone Idea has been a loss-making firm for a long time and has continually been losing subscribers month-on-month. In Q2 FY24, the company posted a loss of INR 8,737.9 crore, higher than a loss of INR 7,595.5 crore in the same period last year. Therefore, this stock might not be suitable for long-term investment but only for capturing the short-term price momentum.
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X (formerly, Twitter) – aayushxkhanna
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