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Although the broader markets are trading in the red zone in the morning trade, traders are going all guns blazing when it comes to buying the shares of Sikko Industries Limited (NS:). This is a micro-cap company therefore trading in such counters is only suited for extremely high-risk traders.
The company is in the business of agro chemicals, having a market capitalization of only INR 99 crore. The stock had been trading sideways for the last 2 months. The range for the counter was also quite narrow, with a resistance of INR 62 and support at INR 55. The stock was hovering in this range and there was no clear-cut direction for investors.
Image Description: Daily chart of Sikko Industries
Image Source: Investing.com
However, the stock has been gaining good traction from the last two sessions and is up 9.6% for this week so far. But more importantly, the stock is hitting upper circuit limits of 5% since yesterday which is a great sign of high investors’ demand. With this rally, the stock also jumped past the upper resistance of the range, and currently trading at INR 62.35, by 9:53 AM IST.
The trend looks strong for the counter and the stock can travel to the next level of around INR 66 – INR 66.5. However, as it is trading at the bottom levels, a much sharper upside can be seen and it won’t be surprising if the stock touches a level of INR 72.
Maintaining the stop loss is extremely important while trading such stocks. An exit level below INR 55, preferably on a closing basis seems sufficient which also accounts for high volatility in the counter.
To reiterate again, this is a high-risk counter and is currently in the trade-to-trade segment, which means traders cannot do intraday trades and the position can only be squared off after the delivery.
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