Stock on the Move; Gains 2%, Breaks ‘Previous Peak’!

  • Stock Market Analysis

While the session’s start hasn’t been on a positive note, with the benchmark Nifty 50 index falling 0.39% to 18,625, by 10:59 AM IST, hunting for stocks in the green zone is not a big task. In that vein, the share price of Muthoot Finance Ltd (NS: MUTT ) is giving investors some relief with its 2% gain. 

It is a midcap consumer finance company with a market capitalization of INR 43,734 crores and a P/E ratio of a mere 10.89, compared to the industry’s average of 22.55. The dividend yield of 1.84% gives it an additional appeal in the midcap NBFC sector.

Image Description: Daily chart of Muthoot Finance with volume bars at the bottom

Image Source: Investing.com

After a good consolidation, the stock started its up move towards ~INR 1,140 levels, but soon met with excessive supply in this zone and eventually came back to a level from where it started its rally. But this retracement turned out to be an opportunity for market participants who were waiting for a dip. The buying pressure from these levels denotes the aggressiveness of the bulls which eventually surged the price higher than the level it could previously reach.

In today's session, the stock surged to a high of INR 1,158.75 which is not just above the previous peak of INR 1,141 but is also the highest level since 12 August 2022. This move has eventually made a structural change in the price chart - from a downtrend to an uptrend. This can be represented by a series of higher high and high low formation (HH & HL).

The volume for the day so far has been recorded at around 472K shares, which is slightly lower than the 10-day average volume of 601K shares. As it’s not even been 2 hours into the trading, the volume figure by the closing is to be watched. If it crosses at least 2x of the 10-day average, then it can be considered a not-so-bad figure.

On the upside, there is a clear runway for the stock to scale to a high of INR 1,200. This is a resistance area where the stock could face increased selling pressure. Since May 2022, there have been two occasions when the price was overpowered by excess selling which eventually turned it towards the south. On the downside, INR 1,045, which is the previous swing low would act as a strong support.  

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  • namami ghosh @namami ghosh
    badiya, simple, clean analysis :D as usual :D
    Like 3
    • Aayush Khanna/Investing.com @Aayush Khanna/Investing.com
      Like 1
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  • Dharma Nitheesh @Dharma Nitheesh
    thank you sir 🙏
    Like 1
    • Aayush Khanna/Investing.com @Aayush Khanna/Investing.com
      You're welcome :) @Dharma Nitheesh
      Like 0
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