Small Caps Making Big Leaps Part 2

JC Parets
March 5, 2021

In our latest post, we highlighted the outperformance of Small-caps over large caps and shared a few ideas that we thought could perform well going forward.

Here is part 2 of the Small-cap actionable ideas. Let's see take a  look at the names that have made the cut!

Nifty Small-cap 100 has been moving past crucial resistances. As can be seen from the chart below, we're tracking 7,850 as the risk management level with 9,650 acting as the next target.

In no market can prices rally without minor corrections, so as long as this index is trading above 7,850, our bullish view remains intact.

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.

APL Apollo Tubes has been the leader of the pack in the metals segment. Take a look at the indicator pane, RSI hasn't moved into negative territory since March 2020. Every pause in the price move has had RSI halting close to 50. This speaks volumes of the strength in the stock!

We are bullish above the level of 1,210 with a target near 1,835.

National Aluminum has been on a tear since crossing the level of 52. The indicator has moved into bullish momentum territory along with a strong breakout candlestick. Any corrections towards 52 can be utilized as buying opportuinities.

We are bullish above the level of 52, for a target near 70.

The last representative from the Metals sector is Tata Steel BSL. The price is moving towards its overhead resistance at 48.50, attempting to breakout from a three-year base. This one is on the radar as the bullish thesis will be confirmed only above the risk management level of 48.50, at which point the target to track would be close to 69.

Apollo Tyre has been gaining from strength to strength as the price consolidates and moves higher at every level. The indicator too has moved from one extreme to the other, now settling into the bullish momentum territory. While the stock has moved past its resistance at 218, the target to keep in mind is 307. Minor dips can be used as buying opportunities.

Cera Sanitaryware has broken out of a three-year base. Stocks breaking out of such long-term bases is a good sign of bullish sentiment in the market rally. As more and more long term bases get taken out, the market rally progresses across the board. Cera is bullish above the level of 3,918 with a target close to 5,111.

Engineer's India has been stuck in a trading range for the most part of 2020 and has only now broken out of that consolidation. With a strong price breakout and the indicator reaching the highest point in three years, the stock may perform well in the weeks and months ahead.

We are bullish with a risk management level of 80 and a target close to 100.

Indiabulls Real Estate is another name that's popping up as it moves past the level of 107, which has a lot of price memory. Stocks moving past such crucial levels that have acted as both support and resistance is a good indication of the inherent demand. This one can be on the radar as the bullish thesis holds true once the price sustains above 125. The target to track would then be 180.

Equitas is another stock that should be on the radar. The price has advanced well post its breakaway gap close to 62 and looks good for another leg of the rally. The risk management level for this particular trade would be 98, with targets close to 116 and 140.

Moving into the chemicals sector, we have GHCL breaking out above an important overhead supply zone at 247. With this level taken out, the next target to track comes in at 357. The price had been halting at 247 on numerous occasions but that supply has now been absorbed.

Supreme Petrochem is the last name on the roster. This is another one for the radar. The stock has formed a four-year base, and is taking another go at the overhead resistance at 446. We are bullish only above the level of 446 for a target near 652.

With this, we complete our coverage of small-cap stocks that are in a strong trend on an absolute and relative basis. The common theme here is big base breakouts and breakouts above the 2018 highs post which small-caps were beaten down. These are significant levels to track when the price moves past the earlier highs.

Thanks for reading and please let us know if you have any questions.

Allstarcharts Team

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