After a very long time, the broader markets are delivering some noticeable correction. Sluggish guidance from Infosys (NS:INFY) coupled with overall weakness in the US tech sector, were the primary signals that pulled the market down today.
In spite of a sea of red numbers, one stock that traders can look to bet on the long side is PVR Inox Ltd (NS:PVRL). It is a popular movie theater chain with a market capitalization of INR 14,190 crores. Traders’ interest in this counter has increased recently after the 50th GST Counsil lowered the GST rates to 5% on food and beverages served in movie theatres.
Image Description: Daily chart of PVR Inox with volume bars at the bottom
Image Source: Investing.com
This is proving to be a good trigger for the stock to pare some of the losses in the recent past. On the technical front, the stock had fallen considerably from its 52-week high of INR 2,214.85 to a low of INR 1,336.4, marked in May this year.
This low marked the first bottom of a Double bottom chart pattern on the daily chart, which acts as a reversal indication. It is known to reverse the prior downtrend to an uptrend and does a pretty well job at that. After reaching a high of INR 1,516.8 it retraced again to a low of around the same level and has started to rise again. This entire price action has resulted in a Double bottom formation, and the breakout of it materialized today.
The stock unexpectedly jumped 4.01% to INR 1,507 and is looking to close above the hurdle. As this will be a weekly closing, the reversal would likely be more prominent. Traders can hunt for long opportunities for the level of around INR 1,680 - INR 1,700. The volume expansion on Friday is also worth noting, with a total of 1.79 million exchanging hands so far which is 91.6% higher than the 10-day average volume of 934K shares.
It now looks like the pain of investors is finally coming to an end and bulls might want to put this counter on the watchlist.
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