The share price of TCNS Clothing Co Limited (NS:TCNS) delivered a breakout on the daily chart last week. Firstly talking about the company, it is a women’s apparel brand with a market capitalization of INR 2,879 crores. Currently, the company is sitting at a record revenue of INR 1,191.9 crores (TTM), slightly higher than the FY20 figure of INR 1,169.81 crores.
Looking at the shareholding pattern of the company, FIIs hold a sizable stake of 16.68% while mutual funds have 2.61% interest. Although the stock is currently trading at quite an expensive valuation, with a mammoth TTM P/E ratio of 603.65, the daily chart setup is depicting some upside in the stock.
Image Description: Daily chart of TCNS Clothing Co with volume bars at the bottom
Image Source: Investing.com
After consolidating for a few weeks, the stock came out of its hibernation state and rallied 5.64% to INR 492.8 on Friday. This move can essentially be deemed as a breakout as the prior range had been broken toward the upside on Friday. The rally on the upside seems to have a decent potential as the stock has fallen around 41% in the last one year. These oversold zones would trigger buying from traders looking for a mean reversion trade.
Another interesting development in this counter is that the stock also closed above its 15-day rolling high. This has happened for the first time after 14 October 2022. This is an indication of the beginning of an up trend and can be clearly gauged through Donchian Channels (15-period), as seen on the chart above. These channels can also be used for trading the stock in a trend-following fashion. As soon as the stock breaks the lower band of this indicator, which is the 15-day rolling low, then an exit from the long positions can be looked for.
The volume figure might not seem high on the breakout day if seen in isolation, which is at 192.07K shares. However, that’s a good 630% jump over the 10-day average figure of 26.01K shares. For traders looking for a fixed target, the resistance of INR 550 - INR 555 can be a good profit booking zone.
Read More: A 9% Dividend-Paying Stock Gives 5-Year-High Breakout!