Stock Under Rs 40: Reversing From Bottom, Surges 5%!

Despite a weak market, there is some action seen in the small-cap space with the Nifty Smallcap 250 index gaining 0.2% to 4,281, compared to the Nifty 50’s fall of 0.06%, by 1:39 PM IST. One stock from the small-cap space that should be on the radar of high-risk traders is Dhani Services Ltd (NS: DHAE ) (formerly known as Indiabulls (NS: INBF ) Ventures Limited).

It is the broking arm of the Indiabulls Group and provides securities and derivative broking services in segments such as - equity, commodities, currency etc, with a market capitalization of INR 2,008 crores. The stock is roughly 3.98 times more volatile than the Nifty 50 index, making it suitable for extremely high-risk traders only.

Image Description: Daily chart of Dhani Services with volume bars at the bottom

Image Source: Investing.com

Coming to the technical setup, the stock was plunging consistently since it marked its swing high of INR 43.25 on 28 December 2022. The one-way fall from there threw the stock to a low of INR 32.35 by 3 February 2023. Since then the fall seems to have been halted and the stock is looking to reverse its course on the back of increasing demand.

Yesterday, it rallied 3.21% while today another 4.44% jump to INR 35.3 is clearly depicting investors’ interest in this counter irrespective of the broader market conditions. The volume has also been on an upward trajectory as the stock is rising. As of writing, a total of 4.25 million shares have exchanged hands on the NSE which is 124% higher than the 10-day average volume of 1.89 million shares (recorded yesterday). Although this is not a very high volume, still a better figure than the average.

The stock is currently trading at quite a low level, making the risk-to-reward opportunity from here quite lucrative. In case it tanks from here, the exit level is near while in case of a rally, the profit potential could be higher. A level of INR 32 can be used for exit in case the upside fades, while the resistance of INR 40 should be targeted by bulls from here. Today, the price surge also led the stock to break above the falling trendline which is further adding appeal to this stock.

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