Chart Check: Four Small-Cap Stocks that Gave Decent Returns in Last 6 Months

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  • 26 Apr 2023

In the calendar year 2019 (CY19), benchmark indices scaled new peaks while mid and small-cap indices continued to reel under pressure and gave negative returns for the second consecutive year. The slide was even sharper in the small-cap as the S&P BSE SmallCap index fell around 7 per cent whereas the S&P BSE MidCap index slipped 3 per cent. The S&P BSE Sensex, on the other hand, advanced over 14 per cent during the period. That said, there were some outliers in the small-cap index which bucked the broader market trend and rewarded investors handsomely.

The list includes names such as Avanti Feeds, Dr Lal PathLabs, Deepak Nitrite, and Blue Star. Shares of Avanti Feeds jumped over 80 per cent in the last three months while those of Dr Lal PathLabs climbed around 38 per cent in six months. Shares of Deepak Nitrite and Blue Star jumped over 30 per cent each in the last four months.

Here's a look at how these four stocks looked on technical charts within the last six months:

Deepak Nitrite Ltd (DEEPAKNTR):

The stock held the 100-weekly moving average (WMA) firmly that resulted in a new lifetime high of Rs 400 levels. Whenever the counter crossed 50-WMA upward decisively, the price scaled a new higher level. When the resistance of Rs 325 was conquered, it did witness selling; however, it was not an extensive sell-off and recovery was faster than the correction. The resistance became support and every upside above Rs 370 witnessed buying momentum.

A moving average (MA) is an indicator in technical analysis that helps to smoothen the price action by filtering short-term price fluctuations.

Blue Star Ltd (BLUESTARCO):

After forming a "Golden Cross" pattern last year, the counter never broke 200-day moving average (DMA) strongly. This move helped to regain buying strength on every possible correction witnessed in September and November 2019. The counter traded with a positive bias above 50-DMA and 100-DMA, as per the daily chart. Moving Average Convergence Divergence (MACD) crossed the zero line upward.

Golden Cross is known as an indicator of a major rally. It is essentially a crossover of short-term moving average crosses with the long-term moving average.

Moving Average Convergence Divergence (MACD) is an indicator that shows relationship with two moving averages called the MACD line. Then a nine-day exponential moving average (EMA) is plotted on the MACD which normally serves as a trigger for buy and sell.

Dr Lal Path Labs Ltd (LALPATHLAB):

The counter witnessed extensive selling pressure above Rs 1,650 levels as per the daily chart. This resulted in a correction below Rs 1,500 levels in December. As this counter crossed 50-DMA placed around Rs 1,550 at the beginning of January, the price once again moved higher to Rs 1,687 and fell towards Rs 1,580 levels. The counter witnessed resistance at Rs 1,670 levels on the closing basis.

Avanti Feeds Ltd (AVANTIFEED):

The counter jumped over 80 per cent in the last three months with the help of moving averages (MA), support levels and trend line breakout. Even when Relative Strength Index (RSI) was in an overbought condition, the stock price never showed major weakness. The recent breakout happened when the counter managed to sustain above Rs 560 levels.

Relative Strength Index (RSI) is a momentum indicator that evaluates the overbought and oversold conditions by measuring the magnitude of recent price changes.

Developed by J Welles Wilder Jr., RSI is displayed as an oscillator that have a reading scale from 0 to 100 where the value of 70 is known as overbought region and 30, the oversold territory. Overbought condition speaks about trend reversal or correction, whereas oversold condition talks about undervalued price.

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