7-Month-High Breakout: Stock Rallies 10% with Volume Jump!

  • Stock Market Analysis

Despite the broader market starting Wednesday’s session on a negative note, the share price of Sudarshan Chemical Industries Ltd (NS: SDCH ) is on a roll. The company manufactures color and effect pigments, having a market capitalization of INR 2,722 crores and trades at a TTM P/E ratio of 47.88. It exports to over 85 countries with 50+ sales members and is the third-largest pigment producer globally.

Yesterday, it announced its Q4 FY23 earnings and reported a 10% YoY increase in income from operations to INR 691 crores. The EBITDA margins grew to 12.3%, from 7.9% a quarter ago but there was a bit of a decline when compared to Q4 FY22’s margin of 13.7%. Its overseas operations are also doing consistently better, with the company clocking FY23 revenue of INR 1,024 crores, its highest ever. This was almost equivalent to INR 1,055 crores in domestic revenue in the same period.

Image Description: Daily chart of Sudarshan Chemicals Industries with volume bars at the bottom

Image Source: Investing.com

The company’s results helped the stock to surge over 10% to INR 431, by 10:00 AM IST and cross above a crucial resistance of INR 425. This was a strong supply zone that overpowered buyers every time the stock tried to cross it for over 7 months now. One can clearly see multiple failed attempts of breaching this hurdle.

But better-than-expected earnings triggered a bidding war among investors and as a result, the stock has comfortably crossed this overhead supply zone, which is setting a bullish tone for it. Above this resistance, the stock seems all set to travel to the next level of INR 450, the peak of 7 October 2022. The volume jump backing this breakout is also supportive. In less than an hour into today’s trading session, the stock has already clocked a total volume figure of 1.18 million shares, which is not just the 2-month high number, but also 1,600% higher than the 10-day average volume of 69K shares.

The only concerning thing here is the big gap being left on the chart after today’s gap-up opening. Although not all gaps are closed, still traders need to manage their risk and therefore no stop loss should be placed in the gap area.

Read More: Weekend Read: The BEST Book to 'Turnaround' Your Trading!

Drop an image here or Supported formats: *.jpg, *.png, *.gif up to 5mb

Error: File type not supported

Drop an image here or

100
  • Tirumaladevi Ar @Tirumaladevi Ar
    Good analysis. Thank u
    Like 1
    • Aayush Khanna @Aayush Khanna
      @Tirumaladevi Ar Thank you, Tirumaladevi :)
      Like 0
    • Drop an image here or Supported formats: *.jpg, *.png, *.gif up to 5mb

      Error: File type not supported

      Drop an image here or

      100
  • namami ghosh @namami ghosh
    crisp and concise analysis
    Like 3
    • Aayush Khanna @Aayush Khanna
      @namami ghosh As usual :)
      Like 1
    • Drop an image here or Supported formats: *.jpg, *.png, *.gif up to 5mb

      Error: File type not supported

      Drop an image here or

      100

Related Articles