Breakout with Gap-Up Opening; Volume Surges by 900%!

  • Stock Market Analysis

At the opening tick on Thursday, the share price of Hatsun Agro Product (NS: HAPL ) is making some noise. The company is in the business of manufacturing and selling milk, milk products, and ice creams, having a market capitalization of INR 19,705 crores.

The stock currently trades at an expensive P/E ratio of 118.81, much thanks to a flat return in the last 12 months, of 1.98% and a 23.8% YoY fall in FY23 net income to INR 165.85 crores. However, despite looking overvalued at the current price, the technicals are pointing to a higher upside.

Image Description: Daily chart of Hatsuhn Agro Product with volume bars at the bottom

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The stock opened the session with a noticeable gap up and is currently trading 3.85% up at INR 916, by 9:44 AM IST. This move is actually a breakout of the symmetrical triangle chart pattern on the daily time frame. As can be seen from the chart above, the stock had been consolidating in a narrowing range and today, it jumped above the falling trendline resistance of this pattern to deliver a breakout.

This is a bullish signal that should cheer long holders. The volume on this breakout has been registered at over 76.5K shares, which is already 900% higher than the 10-day average volume of 7.7K shares. This gigantic rise in volume has taken place in less than an hour of trading, meaning there is a staggering buying interest present to accumulate the company’s shares.

As per the dimensions of the triangle pattern and its targeting mechanism, the estimated level of around INR 975 could quickly come on the screen owing to the high volatility of this counter and its relatively lower liquidity. The stock is also trading at much lower levels compared to its all-time high of INR 1,498, marked in September 2021, therefore the potential upside could be even better, on account of mean reversion.

In case the stock takes a U-turn, traders can place a stop loss slightly below the rising trendline support of the triangle pattern, which is currently at around INR 875.

Read More: Opportunity: This IPO is Garnering a GMP of 35%!

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