Small Cap Stock: Chart Check: After 30% in a month, this small cap stock could reach October 2021 highs in 6 months
The petrochemical stock rose from Rs 40 recorded on August 16 to Rs 53.75 on September 13, translating into a rally of more than 32% in one month.
This is a low volume stock, but short-term traders may look to buy the declining stock for a possible target above Rs 70 over the next 6 months, experts suggest.
The stock hit a 52-week high at 65.95 rupees on October 6, 2021, but failed to maintain momentum. It rebounded from hitting a low of Rs 33.55 on June 21, 2022. Since then, the stock has been in an uptrend.
DCW has generated great success to become one of the fastest growing multi-site multi-product chemical companies in India. It is an industry pioneer with a strong presence in the Chlor-Akali, Synthetic Rutile and PVC business segments, the company’s website says.
Recently, the stock recently gave a break above Rs 51.50 on the weekly charts in September. The stock was seen moving in a range since November 2021 where levels above Rs 51 acted as resistance while support was seen at the Rs 40 level.
A breakout confirms the strength of the trend. Therefore, short-term investors may look to buy the stock down towards Rs 47-40, experts suggest.
On the price front, the stock is trading above its short and long-term moving averages of 5,10,20,30,100 and 200-DMA, which is a positive sign for bulls.
The relative strength index (RSI) is at 66.2. An RSI below 30 is considered oversold and above 70 is considered overbought, according to data from Trendlyne. MACD is above its center and the signal line, it is a bullish indicator.
The share price started its rise from Rs 7 (Mar 2020). The stock was seen making a series of higher tops and higher bottom formations and eventually the stock peaked at Rs 66 in October 2021.
“The stock entered the profit reservation zone and corrected to Rs 33.55 (Jun 2022). The stock made lower highs and lower lows and traded in and below the averages during the corrective mode,” Bharat Gala, President – Technical Research,
“The stock recently gave a range break and broke through the previous high of Rs 51.50, making a new recent high of Rs 54.60, accompanied by supporting volumes,” he said.
The Aroon Up/Down indicator, MACD and Demand Index suggest a possibility of breaking through the all-time high of Rs 66, says Gala.
Possible targets are Rs 70-100. If the share price corrects lower, buy levels are Rs 47-44-40, he recommends. A stop loss to observe in the trade is Rs 34.
(Disclaimer: The recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)