Inverse H&S Breakout: Stock Gains 8% as Volume Spikes 460%!

  • Stock Market Analysis

While the broader market Nifty 50 index has shown a good rally in today’s session after 4 consecutive days of losses, some stocks have also cheered the improving sentiments. Intraday rallies were witnessed by many counters, however, some special stocks ended up delivering a massive breakout on the charts. 

One such counter is Dhunseri Petrochem Ltd (NS: DHUN ) which is a specialty chemicals company having a product portfolio of various grades of PET that find application in sectors, such as packaged drinks, alcoholic beverages, edible oils, pharmaceuticals etc. The company has a market capitalization of INR 899 crores and its share price trades at a P/E ratio of 2.5, compared to the sector’s average of 13.43.

The lower P/E ratio has also been a result of improved earnings, as the company clocked a revenue of INR 679.47 crore in FY22, which was 78.7% higher than the previous year. Consequently, the net income surged 54.6% on a YoY basis to INR 359.1 crores in the same period. The EPS jumped to INR 102.5 which is the highest in the last many years.

Image Description: Weekly chart of DVL 

Image Source: Investing.com

Coming to the weekly chart of DVL, the stock completed the formation of an inverse Head and Shoulders pattern which is a reversal pattern and propels the stock in the upward direction. However, it is also to be noted that DVL shares are not in a downtrend and therefore the emphasis of this pattern is not very high. Still, a break of a major resistance which is called a neckline of the pattern is definitely pointing to a good upside potential from here.

The stock closed the session at INR 278.45 which is the highest closing on the weekly chart since February 2022, depicting a strong momentum. Today's breakout was also backed by a volume expansion with a total of 345.6K shares exchanging hands today, which is the highest one-day volume in over a year and almost 460% higher than the 10-day average of 61.5K shares.

As I stated earlier, the stock was already trading at higher levels and not at the very bottom, therefore I won’t be using the pattern’s targeting mechanism here. Instead, the next strong supply zone of INR 315 - INR 320 would be an ideal level till where the stock could travel.

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  • Ram Ashish @Ram Ashish
    your view Patanjali
    Like 0
  • Tushar Dharji @Tushar Dharji
    dollar dollar
    Like 0
  • Arvind Muthoo @Arvind Muthoo
    Hi, please give your view on Adani Ports daily charts showing cup and handle. your view please. Thanks
    Like 0
  • Vivek Purav @Vivek Purav
    how about Vedanta. I had declared 17.5 Rs Intrim dividend
    Like 0
    • Aayush Khanna/Investing.com @Aayush Khanna/Investing.com
      Vedanta is one of the best dividend stocks out there.
      Like 0
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  • Dave pratt @Dave pratt
    Good to note H & S shoulder break and HnS in play. I also second it's not a false break below shoulder line with volume in support. The HnS confirmation will be key for target from head to shoulder height of 100₹. the target on confirmation sets to CMP plus 100
    Like 0
  • Ketan Parmar @Ketan Parmar
    7977783644
    Like 0
  • Ketan Parmar @Ketan Parmar
    connect to get good weekly positional calls
    Like 0
    • Aayush Khanna/Investing.com @Aayush Khanna/Investing.com
      Thanks for the offer but I never trade on anybody's calls :)
      Like 0
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  • namami ghosh @namami ghosh
    think the figure caption should be weekly chart
    Like 0
    • angad kachi @angad kachi
      hi
      Like 0
    • Aayush Khanna/Investing.com @Aayush Khanna/Investing.com
      Oh yeah, thanks.
      Like 0
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  • bullsbear bearsbull @bullsbear bearsbull
    dhun ticker is not available
    Like 0
    • Aayush Khanna/Investing.com @Aayush Khanna/Investing.com
      Try searching with DVL.
      Like 0
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