This Penny Stock Hits 20% Upper Circuit; Has the Rally Just Started?

  • Stock Market Analysis

The broader market sentiments are looking somewhat positive for the day with the Nifty 50 trading 0.17% up at 15,778.15 and the BSE Sensex gaining 0.29% to 53,065.1, by 1:02 PM IST. Apart from some frontline shares, some small-caps are also delivering decent gains today with the Nifty Smallcap 100 trading 0.7% up to 8,536.85.

One of the smallest of the lot, a micro-cap company that is turning heads on the street is MT Educare Limited. The company has a market capitalization of a mere INR 59 crores and is in the business of providing coaching services to students in secondary and higher secondary schools and pursuing graduation. MT Educare competes with listed peers such as NIIT Ltd. (NS: NIIT ), Veranda Learning Solutions Ltd (NS: VERN ), Shanti Educational Initiatives Ltd (BO: SHAI ) etc. 

Penny stocks are a riskier bet than their larger peers and this space is especially liked by high risk-takers due to the potential for quick returns. MT Educare shares are infamous for their high volatility and therefore conservative traders should try to steer clear of this counter. 

Image Description: Daily chart of MT Educare with ATR at the bottom

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The excessive volatility of the stock can be gauged by the fact that this is the 3rd upper circuit that the stock hit in the last one month. In fact, looking at the Average True Range indicator (ATR) (daily, 14), it is showing a reading of 0.89, which is a massive 8.98% of the CMP. This represents that the share price of MT Educare has moved at an average of approximately 8.98% in the last 14 days! This massive volatility must be taken into account and investors must adhere to proper risk management before making an investment decision.

Today, the share price of MT Educare surged by a massive 20% or INR 1.65 and is locked in at the upper circuit of INR 9.9. The price surge has also been accompanied by an average volume of over 651K shares so far. A much higher volume would have been better, however, due to the lack of sellers, many buying orders art still pending at the highest bid price. 

The stock has an immediate resistance zone of INR 10.4 - INR 10.15, where the rally could take a breather. If the stock breaks above this hurdle, then the next pit stop for the stock would come around INR 11.9 - INR 12.2. Due to a big move today, the nearest support is far behind, at around INR 8.15 - INR  8.2. 

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  • Sudina Rajeev @Sudina Rajeev
    At least please mention it is a loss making company
    Like 1
  • Lalit Shah @Lalit Shah
    Like 0
  • Akash Thakkar @Akash Thakkar
    Lavde nikal
    Like 6
    • Kaushik Gope @Kaushik Gope
      @Akash Thakkar Hold ur emotion
      Like 0
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