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Breakout: Stock Breaks Falling Trendline with an 11% Jump!

Published 12-06-2024, 05:06 pm

As the Nifty Small-cap 100 index continued its rise for the 6th consecutive session, investors’ interest in smaller pockets is clearly visible. One counter that made a splash today is Dish TV India Limited (NS:DSTV). It is an INR 3,148 crore big direct-to-home and teleport service provider in India and internationally.

Even FIIs are interested in this counter as they hold a stake of 12.39% as of March 2024 while mutual funds have a 1.7% interest.

In FY24 the company made a loss of INR 1,966.57 crore over a revenue of INR 1,875.79 crore. This lackluster performance is also being discounter in the share price as the stock is down 7.8% in the last 3 months, totally opposite to new highs in the small-cap index.

Image Source: Investing.com

A signal for a reversal was seen today, as the stock jumped 11.7% to INR 17 and surged past its short-term falling trendline resistance on the daily time frame. This is the first signal that the stock is ending its downtrend and starting to head towards the north.

The breakout day was also supported by a good volume expansion. Today a total of 95.77 million shares exchanged hands on the NSE which is 364% higher than the 10-day average volume of 20.63 million shares. Any breakout when supported by volume expansion (ideally over 300%) has a higher reliability.

Image Source: InvestingPro+

The only problem with this counter is its fair value. While blending some fundamentals, we got to know that the stock has a fair value of INR 18.4, leaving only a 7.7% upside potential. Therefore, we will not set much aggressive targets and on the charts, there is some resistance around this level. So the first level to book some profits is INR 18.5 and the next one is INR 19.5.

To further skew the risk-to-reward ratio in the favor, buying on a probable dip can be a good strategy.

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Read More: Unlocking Investment Potential via Fair Value

X (formerly, Twitter) - Aayush Khanna

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