Penny Stock Under Rs 10: Price Action Depicts 25% Surge!

  • Stock Market Analysis

The mood of the broader markets continues to be negative, with the Nifty 50 index falling for its 3rd session, plunging 0.51% to 18,605, by 11:52 AM IST. The sectoral breadth is also weak today with 10 out of the 11 indices trading in the red zone. A penny stock that is striving in this environment is Kanani Industries Ltd (NS: KANN ).

The company is a jewelry manufacturer with a plant in Surat, Gujarat, and has a market capitalization of INR only INR 89 crores. It is a high-beta counter with volatility roughly 3.4x higher than the Nifty 50 index.

Looking at the daily chart, the stock traded in a sideways to a bearish direction, since mid-August 2022. The volume figures were also subdued during this trading window, depicting less participation from investors.

Image Description: Daily chart of Kanani Industries with volume bars at the bottom

Image Source: Investing.com 

However, from 5 December 2022, both the price action and volume activity seem to have come alive. Yesterday, the stock hit a 10% upper circuit to INR 9.05 for the first time after mid-August 2022 with a noticeable pickup in volume, with a total of 231K shares exchanging hands on that day. This was the highest one-day volume in over a month. Today, the price hit a 10% circuit again to INR 9.95. This price surge was backed by an even higher volume of 360.4K shares, so far, which is the highest volume in around 2 months. Clearly, the stock is coming back to life and is ready to make a move. 

For the trend conformation, the 25-period Donchian Channel which basically is a band composed of the last 25-day high and low has given a go-ahead.  This band is a trend-following indicator, just like a moving average band of Bollinger Bands®, but works on a different principle to gauge trend, i.e. high and low of the past (n) no. of periods. The implications are simple, whenever the stock crosses the upper band, it's bullish, and penetrating below the lower band is a bearish signal. During the above-mentioned trading period, it had never been able to surpass its 25-day high, which has happened today, as it's conforming to a strong trend.

The confluence of volume and price action with a breakout above this band is depicting an initiation of an uptrend from here. On the upside, there is a fair chance, that the stock could be heading toward INR 12.5. 

 

PS - As it is a penny stock, it has a tendency to move from circuit to circuit, which could make it difficult to manage risk. 

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  • Vivek Purav @Vivek Purav
    Rallis rallied today , Your head & Shoulder pattern started giving profit.
    Like 1
    • Aayush Khanna/Investing.com @Aayush Khanna/Investing.com
      :)
      Like 0
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  • Vivek Purav @Vivek Purav
    vip clothing stock under 25 reached 44. I have made good money . thanks. 👍
    Like 1
  • Dharma Nitheesh @Dharma Nitheesh
    I learned a lot from you, and great brother
    Like 1
    • Aayush Khanna/Investing.com @Aayush Khanna/Investing.com
      Keep learning, brother :)
      Like 0
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  • Vikky Donar @Vikky Donar
    sir u r alws awesome by ur analysis , m following u since last 2 yrs , and hv a grt trust on ur analysis
    Like 3
    • Aayush Khanna/Investing.com @Aayush Khanna/Investing.com
      That's so sweet. I want you to start trusting your own analysis as well :)
      Like 0
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  • namami ghosh @namami ghosh
    now I will have to research Donchian Channel ...
    Like 1
    • Aayush Khanna/Investing.com @Aayush Khanna/Investing.com
      Not a big task for you.
      Like 1
    • namami ghosh @namami ghosh
      guruji hai na sikhane ke liye 😁
      Like 1
    • Aayush Khanna/Investing.com @Aayush Khanna/Investing.com
      Ji bilkul.
      Like 0
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  • Devdas Darpelli @Devdas Darpelli
    Crisp thought, l love reading your articles and look forward to them. Thanks.
    Like 1
    • Aayush Khanna/Investing.com @Aayush Khanna/Investing.com
      Keep learning :)
      Like 1
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