Chart of the Day: A Consolidation Breakout with 8% Rally!

  • Stock Market Analysis

Summary

1. HEG Limited's stock surged 7.94% amid a market downturn, aiming for INR 1,900 post-consolidation breakout.

2. HEG boasts a 3/5 financial health rating, solid cash reserves, and consistent dividends, making it a portfolio contender, as suggested by ProTips

3. A potential retest at INR 1,750 could enhance risk-to-reward for traders eyeing HEG's swing opportunity.

While the market was in a seesaw mode on Tuesday, a few counters proved to be the right spot to make money for the bulls. One such counter was HEG Limited which manufactures and sells graphite electrodes in India and internationally. It operates through two segments: Graphite Electrodes and Power Generation and has a market capitalization of INR 6,468 crore.

Despite the Nifty Smallcap 100 falling 1.96%, the share price of HEG Ltd. (NS: HEGL ) was on fire, gaining 7.94% to INR 1,808.85. The stock was consolidating in a narrow range for a long time. The resistance on the upper side was around INR 1,750 and the support on the downside was INR 1,600. This range lasted for about a month which was a result of a tug of war between bulls and bears.

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

Image Source: Investing.com

Looking at the width of the range, the stock now has the potential to rally to INR 1,900 in the near future, which is not very far away from the CMP but can become a good swing opportunity. Generally, after a breakout, the stock falls back to retest the support level which if happens then the demand zone around INR 1,750 would improve the risk-to-reward ratio and the absolute potential target.

On the fundamental level, the stock has received a rating of 3 out of 5 on the financial health check, qualifying it for the portfolio addition. ProTips also suggests that the stock holds good levels of cash, has impressive GPMs, has paid dividends for 6 consecutive years, etc. all of which further increase the confidence in the company.

You can also explore more ProTips bite-sized information in detail by clicking on the specific info.

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