After yesterday’s sharp recovery from the opening lows, the broader markets seem to be in a profit booking mode today. The benchmark Nifty 50 index is down 0.46% to 17,920 by 11:46 AM IST with 10 out of the 11 sectoral indices trading in the red zone.
While investors are looking to take home some profits in today’s session, some stocks are not looking in a hurry to come down One such stock is Bombay Burmah Trading Corporation Ltd (NS:BBRM) (BBTC) which is a INR 6,752 crores big tea and coffee company, engaged in providing tea, coffee, auto ancillary and dental products.
BBTC shares were in a downtrend for quite a long time. The stock had fallen from a 52-week high of INR 1,211.2 to a 52-week low of INR 839.9, depicting a fall of around 30%. The fall had been so consistent that technical analysts can draw a smoothly falling trendline, joining the peaks during the plunge. This trendline had kept the stock from rising during this tough phase for investors and every rise was faded by market participants in their quest to get out of this stock.
Image Description: Weekly chart of BBTC showing a trendline breakout
Image Source: Investing.com
However, this week is turning out to be an inflection point for the stock. Today, BBTC shares rallied over 5.6% to INR 1,022, totaling a weekly rally of around 12% so far. This rally has surged past the falling trendline resistance for the first time since the stock started plunging. This is a positive signal for long holders and could now potentially turn the trend of the stock from a downtrend to an uptrend. However, as I am talking about the weekly breakout, the rally needs to sustain above the level of INR 980 till Friday’s closing for the breakout to be confirmed.
The volume for the day so far is a good 389K shares which is the highest one-day volume in over 4 months. The weekly volume stands at around 854K shares, which is also quite high and there are 1.5 more days to go.
As the trend is reversing from here, the stock could potentially travel to the nearest distance of INR 1,160 in a short span of time. This level is a good supply zone and the stock might take a breather around this level. Even if the stock falls from here, the broader trend won't turn negative as the stock has formed a good base for more than 6 months before this reversal.