As the markets continued to rally on Thursday, the share price of General Insurance Corporation of India (NS: GENA ) (GICRE) is on a roll. It is a well-known insurance company, having a market capitalization of INR 39,438 crore, and trades at an extremely low TTM P/E ratio of 5.95.
The share price of GICRE has been consolidating since mid-September 2023. The formation of lower highs and higher lows translated into a symmetrical triangle chart pattern on the daily time frame. This is a volatility contraction pattern and generally leads to a sharp move upon a breakout.
Image Description: Daily chart of GICRE with volume bars at the bottom
Image Source: Investing.com
Today, GICRE shares jumped past the falling trendline resistance of this pattern and are currently up 8.5% to INR 243, by 1:21 PM IST. This move was also backed by a sharp volume expansion of 5.83 million shares, which is 1,620% higher than the 10-day average volume of 339K shares. Any breakout backed by a heavy volume jump is more reliable hence, the stock seems all set to scale to higher highs from here.
As per the dimensions of the triangle, the nearest level that can be targeted is around INR 275.
Image Source: InvestingPro+
However, on the valuation front as well, there isn’t any red flag. Those who trying to calculate the intrinsic value of the stock can refer to InvestingPro+. After taking 5 financial models into consideration, the fair value of the stock is coming at INR 273 which almost perfectly aligns with the technical target of INR 275.
This is one of the best ways to find undervalued stocks and make decisions when they deliver a technical breakout to improve the chances of profit.
X (formerly, Twitter) - aayushxkhanna
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WHAT A RALLY .. BIG BOOMLike 0
Hi Ayush, This has been a big hit. Thanks for your analysis. What you say with today's huge volume...Hold or Profit booking.Like 2
This was Modi govt's first high priced IPO that hit the investors hard. LIC IPO was the other such dhokabazi.Like 4