Single-digit PE fertiliser stock below Rs 100 witnesses breakout; watch out!

Interestingly, the stock is also meeting Warren Buffett’s rules of investing.   

Southern Petrochemical Industries Corporation (SPIC) Limited is one of the leading fertiliser manufacturing companies in the country located at Thoothukudi in the state of Tamil Nadu. It is a joint venture founded by Dr M A Chidambaram and Tamil Nadu Industrial Development Corporation Limited (TIDCO), a state-owned industrial development institution.  

The stock jumped more than 4 per cent on Wednesday and as a result, it has logged a fresh 52-week high. On the weekly chart, last week, the stock had witnessed a breakout of a cup-like pattern, supported by a robust volume of nearly 4.5 times of 50-week average volume, indicating strong buying interest by the market participants. The 50-week average volume was 74.91 lakh while in the last week, the stock had registered a total volume of 344.95 lakh.   

Currently, the stock is trading above its 10, 30, and 40-week moving averages. And interestingly, it is meeting some of the characteristics of CANSLIM methodology like EPS strength and buyer demand. EPS strength is as high as 98, which is great while buyers’ demand is also great. Price strength is fair at 76; however, it has marked a higher high. Interestingly, the stock is also meeting Warren Buffett’s rules of investing.   

The stock's relative strength index (RSI) has reached its highest value in the last 14 weeks, which is bullish. Also, it has managed to close above its prior swing high. The weekly MACD stays bullish as it is trading above its zero line and signal line. The MACD histogram is suggesting a pickup in the upside momentum. The +DMI is above -DMI and ADX on the weekly timeframe and an uptick in ADX indicate improvement in the trend strength.   

In a nutshell, the stock has registered a breakout of Cup pattern along with volume confirmation and hence, demands special attention.   

The stock has gained nearly 38 per cent on an MTD basis while on a YTD basis, it is up by 33 per cent.