Zero to Hero: After years of underperformance this small-cap Tata Group stock could be on the path to becoming a hero; here's more

The stock's recent price action have noticed something intriguing: a triangular pattern is forming on the weekly chart, with prices converging, signaling an imminent breakout.

In the wake of the tumultuous year that was 2020, when the world was gripped by the unforeseen and unprecedented COVID-19 pandemic, financial markets across the globe resembled a rollercoaster ride. India was no exception to this whirlwind, experiencing a major setback in March 2020 as the pandemic wreaked havoc on its economy. But what followed was a story of resilience, a story akin to the mythical phoenix rising from its ashes.

Fast forward to October 2021, and the Indian benchmark indices were soaring to new heights, defying the odds and reaching all-time highs. The stock market was buzzing with activity, and many individual stocks were marking their own record highs. However, amidst this exhilarating ascent, one particular stock stood out from the rest, poised for what could be a multi-year breakout. And that stock belonged to the venerable Tata Group – Tata Coffee Ltd, or TCL.

Tata Coffee Ltd, a proud 57.48 per cent subsidiary of Tata Consumer Products Ltd, is more than just a company; it's a fully-integrated coffee powerhouse. From coffee plantations to curing facilities, roast and ground coffee production, and even instant coffee plants, TCL is a formidable player in the world of coffee.

In October 2021, TCL hit a high of Rs 254.40, a moment that hinted at its untapped potential. Since then, it has made several valiant attempts to breach this level, teasing investors with glimpses of greatness on an intra-week basis. Yet, it always fell short of securing a closing above this crucial weekly level. However, astute observers of the stock's recent price action have noticed something intriguing: a triangular pattern is forming on the weekly chart, with prices converging, signaling an imminent breakout.

As of Wednesday, TCL is showing signs of life, with a 1 per cent surge in its stock price, hovering near its daily peak. The key now lies in its ability to sustain above the zone of Rs 255-260. If it achieves this, it would signify a double breakout – not only from the triangular pattern but also from the long-term horizontal trendline that connects the significant highs dating back to October 2021.

But TCL's allure goes beyond just these technical indicators. The stock is trading near its all-time high, comfortably above both short and long-term moving averages. It adheres to Mark Minervini's trend template, a testament to its robust performance. The stock is not just above the 40, 30, and 10-weekly averages, but they are all trending upwards, painting a picture of enduring strength. Furthermore, the weekly MACD (Moving Average Convergence Divergence) is in a clear uptrend, rebounding while finding support at its nine-period average, providing further validation for the bullish sentiment surrounding the stock.

It's worth noting that despite the stock market's ebbs and flows, TCL has provided little in the way of returns since its peak in October 2021, trading at levels reminiscent of that time. This intriguing dynamic positions this Small-Cap Tata Group stock squarely on the radar of savvy investors, especially as concerns about froth in Mid-Cap and small-cap stocks continue to percolate through the financial landscape.

In conclusion, Tata Coffee Ltd (TCL) is a stock worth watching closely. As it stands at the precipice of a potential multi-year breakout.

Disclaimer: The article is for informational purposes only and not investment advice.