Chart Check: After 10% rally in a month, this smallcap breaks out from 85-week consolidation; time to buy?

Mayur Uniquoters, part of the leather products industry, rose by about 10% in a month to hit a fresh 52-week high last week in August and the chart pattern suggests that the upside may not be over yet.

Short-term traders can look to buy the stock for a target above Rs 700 in the next 4-5 months, suggest experts.

The stock which is part of the S&P BSE Smallcap index rose from Rs 507 as on July 24, 2023, to Rs 558 recorded on August 24, 2023 which translates into an upside of about 10% in a month.

The company with a market capitalization of over Rs 2400 cr trades at a P/E multiple of 22.60x and an Earnings Per Share (EPS) of 24.75, BSE data showed.

The momentum helped the stock to hit a fresh 52-week high of Rs 583 on 22 August 2023, but it failed to hold on to the momentum and witnessed profit-taking on Friday in line with the trend seen in benchmark indices.

The stock was moving in a narrow range for the past few months where Rs 540 on the upside acted as a critical resistance and Rs 300-320 acted as a crucial support for the stock on the weekly charts.

The stock finally broke out of the range as the stock closed at Rs 559 on 25 August 2023. The breakout from the consolidation range has opened room for the stock to head towards Rs 700 levels in the next few months.The daily Relative Strength Index (RSI) is at 63. RSI below 30 is oversold and above 70 is considered overbought, Trendlyne data showed. The daily MACD is above its center and signal line, this is a bullish indicator.

In terms of price action, the stock is trading above most of the short and long-term moving averages placed at 5,10,30,50,100 and 200-DMA on the daily charts.

“Mayur Uniquoters stock prices have given a breakout with rising volumes from the 85-week-long consolidation phase. The ticker is in strong uptrend with the formation of higher highs and higher lows on the short term as well as long term charts,” Aditya Thukral, an independent analyst, said.

“A breakout in price along with RSI and a spike in volumes suggest a strong breakout. The volumes during the consolidation phase have been declining which suggests that accumulation has happened during that phase,” he said.

This uptrend is expected to continue in the stock prices where longs should have stop losses below 486 on a weekly closing basis which is the higher low of the ongoing rally.

“On the upside, longs in Mayur Uniquoters can expect a target of Rs 770 price levels in the next 4-5 months which is closer to the 161.8% extension of the consolidation,” recommends Thukral.

Prices are well placed above all the major exponential moving averages viz. 50-day, 100-day, and 200-day. Previous resistances continued to provide support to the stock prices at every juncture, following the principle of polarity.

(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)



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