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As the momentum in the small-cap space is still going strong, another stock has come on my radar that is going all guns blazing. It is Fine Organic Industries Ltd (NS:) which manufactures oleochemical-based additives and has a market capitalization of INR 13,880 crore.
The stock is a bit expensive (price-wise) but that does not deprive it of scaling to even higher levels from here. The stock has clearly followed a downtrend in the recent past after it peaked out at INR 5,125 on 8 June 2023. Since then, investors started booking profits and as a result, the price took a breather and cooled off.
Image Description: Daily chart of Fine Organic Industries with volume bars at the bottom
Image Source: Investing.com
On the way down, it took resistance from a falling trendline which kept it from rising. Any attempt to surge past this trendline eventually failed and the stock reversed towards the south. Since the peak, there have been a total of two attempts to break the trendline, both of which were a failure.
Today, as the entire specialty sector is rallying, the share price of Fine Organic Industries jumped 3.5% to INR 4,686, by 2:29 PM IST and finally soared past this trendline resistance. This is one of the two reversal signals that has formed on the chart.
The other one is the formation of a higher high and higher low (HH & HL) pattern on the daily chart. It denotes an uptrend in the most basic form. The stock was able to cross the previous peak of INR 4,665, marked on 7 August 2023 and the immediate low of INR 4,505 was actually higher than the preceding low of INR 4,432.55 marked on 28 July 2023.
All in all, the trendline breakout coupled with the HH & HL formation is translating into a probable uptrend in this counter, and not to forget the accompanying sectoral strength which further adds to the bullishness on the counter. For the immediate future, there is still some room for the stock to rally to the next hurdle of INR 5,100. A stop loss can be placed at INR 4,500 to curb the downside risk.
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