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I generally do not analyze stocks that are priced less than a rupee, however, there are traders who love to trade small penny stocks for quick gains. Here’s is one such stock that can be looked at for a momentum play.
The company Godha Carbon Insulation manufactures and sells electronic cables and conductors in India and has a market capitalization of only INR 59 crore. In FY22 the company was profitable, while it turned to a loss-making one in the next year. The stock is priced at less than a rupee and fundamentals do not work much with such counters.
Image Description: Weekly chart of Godha Carbon Insulation with volume bars at the bottom
Image Source: Investing.com
Looking at the daily chart setup, the stock is in a clear momentum. It has been rising from INR 0.5 to the CMP of INR 0.95 without any hiccups. There is a minor resistance around INR 1 which can pose some challenges for the counter. However, once this selling zone is crossed, the stock can make a good attempt to rise to higher levels.
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Above INR 1, traders can look for a 30% upside, till INR 1.3 which is where the stock could again face some trouble. As this is a pure momentum stock, traders trying to capitalize on it must maintain a very strict stop loss to safeguard their capital in case the momentum fades.
One good way to trail stop loss levels in stocks that hit circuits is to trail through circuits. Once the target level of the trader is met or the rally fades, an exit should be made.
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