Small-cap stock trading below its intrinsic value registered a solid breakout; don’t miss the action!
The stock's substantial surge had led to the breakout of a 100-week long cup-shaped pattern.
As the Indian benchmark indices opened higher today, hopes were high for another day of gains in the stock market. However, what followed was unexpected. The indices not only trimmed their early gains but were also seen trading in negative terrain, leaving investors worried about potential losses. The Nifty and Sensex were down by 0.20 and 0.24 per cent, respectively, putting a damper on the overall market sentiment. The Nifty50 had even slipped below the crucial 19,800-mark, intensifying concerns among market participants.
But amidst this profit-booking frenzy and market downturn, there was one Small-Cap stock that stood out as a shining knight, bravely defying the market's bearish trend. With a market cap below Rs 1000 crore, this stock seemed to be making its mark in a bold and confident manner. The stock had surged nearly 7 per cent and managed to log a fresh 52-week high, catching the attention of astute investors.
What truly intrigued the seasoned traders and analysts, however, was the significant surge in trading volumes accompanying this remarkable price rise. The total trade volume had reached its highest point in the last 12 trading sessions, surpassing even the 30-days average volume by more than two-fold. Such a surge in volume indicated strong interest and conviction among investors, adding to the allure of the stock's performance.
The name of this resilient stock is Summit Securities Ltd, a non-deposit taking NBFC registered with RBI. The stock's substantial surge had led to the breakout of a 100-week long cup-shaped pattern. This pattern, a variation of the cup-with-handle pattern, indicated a bullish trend. The horizontal line of the cup-shaped pattern had been placed in the zone of Rs 861-876, and the stock had confidently witnessed a resolute breakout on Thursday, catching many traders by surprise.
Taking a closer look from a technical standpoint, the stock was not only trading above the 20, 50, and 200-DMA (daily moving averages), but all of these moving averages were also trading in the desired upward direction. This confirmed the stock's positional trend in an upward trajectory, a promising sign for investors. Furthermore, the daily RSI (Relative Strength Index) had seen a sharp spike, taking support at its 9-days exponential average. The weekly RSI was in a strong bullish zone, indicating robust buying momentum.
The weekly time frame's MACD (Moving Average Convergence Divergence) showed a strong bullish momentum, further cementing the stock's positive outlook. The Average Directional Index (ADX), a measure of trend strength, stood at an impressive 37.85, confirming a robust uptrend for the stock. Notably, the +DI (positive directional indicator) had significantly surpassed the -DI (negative directional indicator) and ADX, signaling a potent bullish strength on the weekly time frame.
Considering the fundamentals, the intrinsic value of Summit Securities Ltd stood at Rs 1,129, while the book value of the stock was at Rs 4,683. With the stock currently trading at a price to book value of 0.17, it appeared to offer an attractive investment opportunity. Moreover, the promoter holding of 74 per cent suggested a strong vote of confidence from insiders.
It is crucial to remember that the views and opinions expressed in this article are solely for informational purposes and do not constitute financial, investment, or any other form of advice. Investors are advised to conduct thorough research and seek guidance from professional financial advisors before making any investment decisions.