This Small-Cap Stock Hits 20% Upper Circuit, Breaks Major Trendline!

  • Stock Market Analysis

The broader markets have started the week on a cheering note, with the Nifty 50 index gaining 1.01% to 15,856 and the Sensex surging 0.98% to 53,247, by 12:25 PM IST. All 11 sectoral indices are trading in the green zone as a buying frenzy is being witnessed across the board.

In the midst of a green sea of numbers, one stock that is luring investors is a lesser-known small-cap advertising company, Vertoz Advertising Ltd (NS: VERZ ). The company has a market capitalization of a mere INR 90 crores and offers digital advertising and monetization services to its clients. 

The share price of Vertoz is only listed on the NSE and today the stock surged 19.97% to hit the upper circuit limit of INR 90.7, by 12:35 PM IST. The volume for the day so far has also been impressive, at over 173.1K shares, which is the highest one-day volume for the month. Today’s volume was also over 1,400% higher than the 10-day average of 12.3K shares recorded yesterday. Currently, more than 35K shares are pending at the highest bid to be executed. However, a lack of sellers is keeping those buy orders unfilled. This outstripping of supply at the current levels show the urgency of buyers to make a long position in Vertoz shares.

 

Image Description: Daily chart of Vertoz Advertising with volume bars at the bottom

Image Source: Investing.com

Today’s up move has also translated into a major trend change for the stock. The Vertoz share price had been consistently falling since the beginning of the year. During the continuous fall, the stock had retested its falling trendline several times and none of the time was able to break above it. In fact, the downward sloping trendline was tested a total of 4 times this year, which increases the credibility of this trendline. 

Today, with a major volume spurt, the stock has finally been able to surge past its trendline resistance and might give a closing above it. This would mean a clear trend reversal towards the north, at least for the medium term. It is difficult to gauge how far the rally could stretch as small-cap stocks are highly volatile and are infamous for their sharp reversals. However, looking at the chart, the nearest resistance seems to be looming around INR 108 - INR 105.

Before, heading towards the target, the stock might fall back towards its trendline to retest this new support which is where the left-out investors would try to get in. As it is a very small-cap stock, investors should be prepared for highly volatile moves, especially considering the fragile nature of the broader markets. If the stock falls back below the trendline and sustains there, then this move could be termed a whipsaw.

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  • Abhishek Verma @Abhishek Verma
    On A Certain Parameters Adani Power Changed the Trend from Sell to Buy ..and Seen good base around 240 level
    Like 0
  • Naresh Kumar @Naresh Kumar
    kindly advise about Adani Power
    Like 0
  • Naresh Kumar @Naresh Kumar
    kindly advise about Adani Power
    Like 0

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