Taking cues from the broader markets, the small-cap space is shining and cheering investors with breakouts all over the place. The Nifty Smallcap 100 index is up 0.72% to 11,683, by 2:07 PM IST and one counter that has come on my radar is IND Swift Laboratories Ltd (NS:ISLB). It is a pharmaceutical company with a market capitalization of INR 526 crore.
FY23 was a turnaround year for the company as it clocked a revenue of INR 1,185.24 crore which was the highest on record. Also, the company was able to come in profits, reporting a net income of INR 42.48 crore, after three consecutive loss-making years. FIIs also started investing in this company with an initial stake of 0.08%, as of June 2023 which was nil a year ago.
Image Description: Daily chart of IND Swift Laboratories with volume bars at the bottom
Image Source: Investing.com
On the technical front, the stock delivered a classic ascending triangle chart pattern on the daily time frame which is quite a bullish signal. It rallied 8.8% to INR 96.95 and soared past the horizontal resistance of INR 94.5 - INR 95.
The resistance break was also supported by a volume jump to 1.04 million shares so far, which is not just higher by 260% from the 10-day average of 287K shares but also the highest one-day figure since January 2022.
The stock was already moving up for the last 4 months and this new breakout has given a fresh push to the uptrend as the stock surged to a 52-week high level. By taking the dimensions of the ascending triangle pattern into consideration, the stock is probably gearing up to rally to the next level of INR 108 in the near term, giving a decent profit potential of over 11%.
As the market hasn’t been closed yet, it would be more prudent if traders wait for a closing above the resistance before initiating long positions. A stop loss can be maintained below the lower trendline support of INR 85.5.