Descending Triangle Breakout: Stock Gains 12%, Volume Soars 2,900%!

  • Stock Market Analysis
  • Editors Pick

As the broader market turned bullish from the opening weakness, with the benchmark Nifty 50 index rising 0.4% to 18,586, by 12:23 PM IST, many stocks are scaling to higher levels as investors’ confidence is strengthening. The IT sector is the top gainer for the day so far, with the IT index gaining 0.79% to 30,571 and therefore, going long on this space could prove to be a safer bet.

One small-cap IT counter that has delivered a massive breakout on the daily chart is Tanla Platforms Limited (NS: TNSL ) with a market capitalization of INR 10,013 crores. The stock looks quite undervalued, with a P/E ratio of 18.57, compared to the industry’s average of 27.04, and is a high-beta counter with volatility roughly 3.33x higher than the Nifty 50 index.

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

Image Source: Investing.com

As can be seen from the chart above, the stock’s movement had been contracting since September 2022 as it was going sideways. The support levels almost remained intact during this period but the resistance kept on coming down on account of lower peaks. The falling trendline is clearly representing the increasing selling pressure in the stock due to which every new peak was lower than the prior one.  

This entire price action turned into a Descending Triangle chart pattern, the breakout of which was seen today. The stock soared by a massive 12% to around INR 825, after retracing a bit from the day’s high of INR 849. This sharp rally on the breakout day holds quite a high importance.

Looking at the volume figures the bullish picture looks even better. The volume for the day so far was recorded at a whopping 3.81 million shares which is a staggering jump of around 2,900% from the 10-day average of 126.7K shares. Now that’s something! This kind of volume support behind the breakout is very encouraging. As the breakout is confirmed, the nearest level to which the stock could rally is around INR 900 which is a very strong resistance. Once this resistance gets taken out, a further potential to around INR 1,150 would be opened.

There is decent support of around INR 715 which is quite strong. As long as the stock is hovering over this level, a bearish view should not be established.

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  • Kedar Sawant @Kedar Sawant
    Profit booking seen today after yesterday's rally. Stock needs to close above 796 levels to gain positive momentum and see upside of 1000 in near term. Immediate resistance for stock is 869.
    Like 1
  • ps narayanan @ps narayanan
    no btst nifty today
    Like 1
  • namami ghosh @namami ghosh
    following your trail and keeping my nose to the grindstone, guruji 😁
    Like 1
    • namami ghosh @namami ghosh
      thank you, Aayush... means a lot as I am just starting out. need I mention that i love your sharp intellect and strong drive. u do stand out from the crowd.
      Like 1
    • DEEPAK SAINI @DEEPAK SAINI
      Open eyes dear Ayush. 5 day, 30 day n 3 month RSI is above 75. Any kid can sense manipulation. Not a single correction in last 15 days. Suddenly world is out of recession...and China is celebrating Happy Covid Festival.....
      Like 0
    • Aayush Khanna/Investing.com @Aayush Khanna/Investing.com
      So sweet of you, Namami :)
      Like 0
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