Bulls Eying on Triangle Breakout Amid 11% Rally!

  • Stock Market Analysis

As the broader markets are continuing their up move on Tuesday, mid-cap and small-cap spaces are also witnessing a sea of green numbers. However, one stock that needs special mention is Hikal Limited (NS: HIKA ). It is a pharmaceutical company with a market capitalization of INR 3,492 crores.

Yesterday, the company came out with its Q4 FY23 earnings report, wherein its revenue recorded an increase of 9% YoY and stood at INR 545 crores, primarily supported by a change in product mix and increased demand for select products. Its EBITDA surged 48% YoY to INR 90 crores as sequential QoQ recovery in margins was a result of softening of raw material prices and several operational improvement initiatives.

However, the trigger for the buying frenzy for the stock in today’s session was a 74% YoY jump in net income to INR 36 crores. The company also said that the USFDA audit conducted at its Panoli site was concluded with ‘zero’ observations.

Image Description: Daily chart of Hikal with volume bars at the bottom

Image Source: Investing.com

On the technical front, the stock jumped over 11% to INR 312, by 10:32 AM IST, and delivered a crystal-clear breakout from a symmetrical triangle chart pattern on the daily time frame. The price surging above the falling trendline resistance of this triangle pattern is painting a bullish picture for the stock and the current downtrend might soon change to an uptrend.

The volume in around 1 hour of trading has been recorded at over 3.89 million shares, which is the highest one-day figure since 3 January 2023. It is also over 1,700% higher than the 10-day average volume of 215.5K shares. With such a high volume support and a breakout with a gap up, the rally looks quite sustainable.

As per the dimensions of the triangle pattern, the stock looks all set to rally to the next level of INR 370, giving it a high upside potential of around 18% from the CMP. As there is a gap on the chart after today’s blistering rally, the stock might retrace a bit to fill the gap which is a common behavior. To manage the risk properly, traders can look at the lower trendline support to place their stop loss orders.

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  • Rohit Jha @Rohit Jha
    Is it wise enough to look for breakout patterns parralal to earning report?.Most of the time they turnout to be false breakouts
    Like 0
  • Danish Sulaiman @Danish Sulaiman
    Like 1
  • ravibabu avvari @ravibabu avvari
    Break away gap up, if it sustains above that Major TL. may be a very good long
    Like 0

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