Bank stock jumps 5% after Tikri Partners bought 2.2% stake in the company via bulk deal
Penny stock is a volatile space and therefore traders with a low-risk appetite should steer clear of it. One stock that has come on my radar and is priced less than INR 11 is Nagarjuna Fertilizers and Chemicals Ltd (NS:NGFR) which is primarily engaged in the manufacturing of Urea and has a market capitalization of INR 601 crores.
The sectoral breadth of fertilizer stocks is quite good in today’s session and this stock is also joining the party. It had been falling for the last few sessions and was facing consistent resistance from the falling trendline on the daily time frame.
Image Description: Daily chart of Nagarjuna Fertilizers and Chemicals with volume bars at the bottom
Image Source: Investing.com
However, the stock managed to gain momentum on Wednesday and jumped to a 5% upper circuit, at INR 10.55. This move helped it to break the trendline resistance which is now indicating a trend reversal from these levels. Before breaking this hurdle, the stock was also consolidating briefly in a narrow zone which further improved the reliability of the impending rally.
As the stock hit an upper circuit, the exchange-traded volume is less, at around 620.4K shares. I generally don’t give volume high importance when the stock hits a small circuit as most of the buying orders are not able to get executed due to a lack of sellers.
Looking at the daily chart, the stock might attempt to climb to the next hurdle of INR 11.5 which is a decent move for swing traders. For long positions, the ideal level to place a stop loss is below the brief consolidation phase, which is at around INR 9.75.
I would like to reiterate that this is a very risky and volatile space and often requires highly-skilled traders. Therefore, newbies or folks with less capital should look to dabble in much more stable stocks.