A 200% Rally Continues in this Stock; Surges to ‘All-Time High’ Today!

  • Stock Market Analysis

As of 1:32 PM IST, the broader markets are looking positive. Although, yesterday, the market was also positive in the first half of the day but took a sharp U-turn before the closing, therefore investors should be careful while capitalizing on today’s rally. 

With 10 out of the 11 sectoral indices trading positive, some stocks have continued their bull run in this positive environment and touched a new all-time high today and one such stock is ABB India Limited (NS: ABB ). The company is engaged in the power and automation business and has a market capitalization of INR 50,111 crores. 

The share price of ABB has continued its bull run which started from the bottom of the Covid-19 pandemic lows. The massive rally from the low of INR 729 to the high of INR 2,528 has delivered dream returns to investors. One of the reasons for the massive demand for the company’s shares is its performance in FY22. ABB increased its consolidated EBITDA by a sizable 90.1% in FY22, while net income surged over 137.07% to INR 519.71 crores, as compared to the previous year. The EPS also shot up from INR 10.35 in FY21 to INR 24.53 in FY22.

Comparative analysis of ABB (Blue) and Nifty (Purple) from 2020 to date

Image Description: Comparative analysis of ABB (Blue) and Nifty (Purple) from 2020 to date

Image Source: Investing.com

During the rally, every dip had been capitalized on by investors as a buying opportunity and the stock has significantly outperformed the broader market Nifty 50 index, since the beginning of 2020. In the last 2.5 years, while the ABB shares delivered a decent return of 88.66%, the Nifty 50 index is up 30.63%.

Weekly chart of ABB showing a range breakout

Image Description: Weekly chart of ABB showing a range breakout

Image Source: Investing.com

Today, shares of ABB surged past its previous all-time high and delivered a massive breakout on the charts. For the last many months, the stock had been trading in a broad range of INR 2,488 (resistance) and INR 2,180 (support). As the stock kept on bouncing between this support and resistance, investors kept on buying the bottom and selling the top, which is one of the best strategies for a non-trending market/stock.

However, today, ABB shares broke above the resistance and started to trade at all-time high levels which would probably resume the ongoing bull run in the stock. It is also to be noted, that the prior trend of the stock has quite been strong and a 240% rally might leave little room for the stock to surge higher from here. Nonetheless, the range breakout for the stock gives it a theoretical target till the INR 2,790 - INR 2,800 levels. If the stock falls back into the range, the breakout could be deemed as a failure.

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