Small Caps Making Big Leaps Part 1

March 4, 2021

Small-Caps are now the flavour of the season, or at least of the current market setup. With these stocks outperforming the broader market, we took a look at some stocks that could be actionable trades with good risk-reward ratios.

We've broken down this post into two parts to do justice to the number of ideas we're observing right now.

As the Small caps continue to outperform the market, the constituents belonging to this segment are expected to generate greater returns than the large-caps.

For now, it looks like this index is moving about in a market of its own. The next target that we're tracking is 9,650 and the risk management level is 7,850.

Click on chart to enlarge view.

Now let’s take a look at some actionable ideas at current levels that look attractive on the long side for the next few weeks and months.

The first thing that stands out from this chart is the giant base that the stock is breaking out of! Just look at that, this is a 15-year breakout. 15 years! Balrampur Chini seems like it's getting ready for a big move in the weeks and months ahead. The indicator is suggesting strength, price is breaking out of a giant base, and above a level with a lot of price memory. There are a lot of things going for this stock.

We are bullish above the level of 202, with a target near 310.

This stock has been a market favourite. Amber Enterprises has been outperforming the broader market for quite some time and we see no reason why this should change. The stock is bullish above levels of 3,390 with a target near 5,105.

Notice how the indicator has disbanded itself from the lower section of the pane. Persistent strong bullish sentiment on this one!

Next up, Tata Coffee. Another base breakout here, this time it's a 3-year breakout. The price consolidated at the earlier support of 99 for quite some time and has now broken out above the resistance of 131. Going forward, we are bullish on this stock with a target of 183 and a risk management level of 131.

Vaibhav Global has had a phenomenal recovery from its March 2020 lows. Another name where the indicator has abandoned the lower section of the indicator pane. As the strength continues to play out, the next target is near 4,875 with a risk management level of 3,102.

VIP Industries has made slow and steady progress. The price breakout above the resistance of 363 with the indicator moving sharply from the oversold to overbought territory indicates the strength that's building in the stock. We are bullish above levels of 363, for a target near 471.

Grindwell Norton looks ready for the next leg of the rally as the price moves past the 900-mark. The strong weekly candles since the breakout at 700 allude to the inherent strength in the stock. We are bullish above the risk management level of 900, with a target near 1,225.

Graphite is back. The stock that made headlines during its rise and fall, seems good for another headline- this time for the rise. The price is back knocking at its resistance, ready to explode. We are bullish (as is the indicator) above the level of 493, with a target near 735.

Next, we have Nilkamal. The price has moved past its resistance of 1,745 and has held its ground, which is a positive sign. For those interested in pattern identification, this is a Flag pattern in the making, after what looks like a double bottom. Both indicating a higher upside in the weeks and months ahead.

We are bullish above the level of 1,745 with a target near 2,275.

Uflex has moved past its Fibonacci retracement of 61.8% level of 358, as well as the crucial price resistance of 380. A sustained move above 380 can take the price further towards 506.

Here's some power from the Power sector. Kalpataru Power seems like it has all the ingredients in the making for a breakout. The retest of the support level at 316, followed by a strong move towards the next level of 406, along with a bullish sentiment in the indicator are all alluding to a further upside.

We are bullish only above the level of 406, with a target near 553.