F&O Stock Approaching Support; Volume 'Exploded’ Over 1,400%

  • Stock Market Analysis

In technical analysis, we primarily look at two data sets - price & volume. While the price action is the main indicator of the direction of where the security is headed, its volume figures often help to confirm the direction. Hence price should not be looked at in isolation and should always be complemented with the volume study. 

ABB India Ltd (NS: ABB ), which is a heavy electrical equipment manufacturer with a market capitalization of INR 65,726 crores caught the attention on the street. The stock which generally clocks a volume of around 420K shares (10-day average) saw a massive volume spike in today’s session. A total of 6.4 million shares were bought & sold on the NSE which is a skyrocketing jump of around 1,420% from the average. 

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

Image Source: Investing.com

Obviously, this is not just a volume from small investors; some large block/bulk deals must have taken place. Whenever astute investors enter or exit a stock, its price action should be watched carefully which could hint towards the future direction. In the case of ABB India, there has been quite a subdued price action that took place today, relative to the kind of volume it attracted. By the closing, the share price of ABB India was down 0.48% to INR 3,000.7. 

However, if you zoom out a bit, you would notice one interesting development that’s taking place. On the daily chart, the stock is making a crystal-clear Descending triangle chart pattern which is a bearish pattern. Since it marked its peak of INR 3,446.3 in the first week of September 2022, it had only been making lower highs, while the lows remained at around the same level. This is a structural change that depicts an uptrend changing to a sideways trend with consolidating range.

This consolidation can be depicted in the form of a Descending triangle, as shown above. The support of this triangle pattern is very near, at INR 2,940 - INR 2,950. As the stock is approaching this level, either it would bounce back as done in the past or would give up this time. If the latter scenario happens, then we would see a major breakdown in the stock. 

As the stock had been rallying for a long time prior to getting topped out, there are no major support levels present below the triangle breakdown. If the stock gives up this time, it might travel by another ~INR 500 to around INR 2,500. 

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  • deepak agarwala @deepak agarwala
    Good article. Please analyse about Mangalore Chemicals and Fertilizers?
    Like 0
  • Jb chandan Chandan @Jb chandan Chandan
    Great and timely Prudence  requires to wait for 2500.otherwise tens of other  discussed  like abcl,ib housing  jk cement  etc shares  to bet.always Great learning
    Like 3
  • Jb chandan Chandan @Jb chandan Chandan
    Great
    Like 0
  • Sean Fon @Sean Fon
    msci rebalancing
    Like 0
  • Pankaj Mintoo Rana @Pankaj Mintoo Rana
    Look at INDHOTEL if u want to look at volume bro...
    Like 0
  • Trader Stock @Trader Stock
    it was just msci changes ..so just cuz one day volume was there it does not mean things will change .volume is just an indicator..prices change but today was MSCI..
    Like 3
    • Nishant Gurnani @Nishant Gurnani
      Msci means?
      Like 0
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