Nifty Small-Cap Stocks To Buy

JC Parets
June 14, 2018

Mid and small-cap stocks have been under-performing their large-cap counterparts as of late, however, it's important to remember when looking at an index that it's basket of stocks and therefore looking at each of the components can unearth great opportunities. Yesterday we did a deep dive into mid-cap stocks for long opportunities, so today we're following that up with a look for similar setups in small-caps.

Before we get into individual stocks, I want to highlight the potential failed breakdown that we're watching in the index itself. Last week prices undercut the March lows as momentum diverged positively. If we can get back above 8,040, it would confirm a failed breakdown and likely be the catalyst to push this market to new all-time highs. The individual names within this index remain mixed, so a neutral stance remains appropriate in the index itself until this range resolves itself.

Click on chart to enlarge view.

The first stock on our list is Parag Milk Foods, which is resolving a 2-year range to the upside. This looks like the start of a new long-term trend, therefore we want to be buying this breakout above 357 and taking profits near 452.

The next name on our list is TV Today Networks which broke out of a 1.5-year base last September and has been trending higher since. Prices have been consolidating above our first price target since December and are now ready to continue to the upside. As long as prices are above the May closing lows of 430, we want to be buying weakness and taking profits at our secondary price target of 577.80.

Here is a list of the remaining small-cap stocks we want to be buying:

BASF India has been consolidating above our first price target of 1,915 since November. During this time, the 200-day moving average has caught up and momentum did not get oversold. The weight of the evidence suggests higher prices are ahead, so we want to be long above 1,900 and taking profits near 2,660.

Bombay Burmah TG DS has been digesting its strong gains from 2017 over the last six months and is back toward the top of its range. This is a stock we want to be watching and buying a breakout above 1,700, with a price target of 2,550.

FirstSource Solutions is a name we've spoken about before. It broke out of a 10-year base in March and has been trending higher since. It's met and exceeded our first price target of 78, so we only want to be long above that level and taking profits at our secondary price target of 123.

Himachal Futuristic Communication Ltd. is attempting a breakout from a 6-month range. We want to be buying the stock if it's above 33.75 with a price target of 49.

Jai Corp. Ltd. is another name to watch as it's pulled back to the level it broke out from late last year. If prices can get back above 169.50, we want to be long and taking profits at our secondary price target of 252.

Johnson Controls - Hitachi Air Conditioning India Ltd. is approaching all-time highs again. We want to buy a breakout above 2,725 and look to take profits near 3,055.

Jyothy Laboratories Ltd. broke out of a 1-year base in May and quickly met our first price target of 488. While some consolidation in prices is expected, this looks like the start of a new long-term trend and therefore we want to be buying a breakout above 488 and taking profits near 588.

Lakshmi Machine Works Ltd. continues be trend higher over the long-term and recently pulled back to where it broke out from in April around 7,870. We want to be buying this pullback as long as prices are above that level and taking profits near 11,865.

Minda Industries is another rangebound stock consolidating toward the top of its range. We want to be buying a breakout above 1,340 with a price target of 1,545.

Suven Life Science has been consolidating between 141 and 221 since early 2016 and has just broken out to the upside. We want to be buying this breakout above 221 and taking profits near 352.

Take Solutions Ltd. is another name we've spoken about on the blog before. Since our initial price target of 247 has been exceeded, it's now our new risk management level and our next price target is 347.

Tata Elxsi is now decisively breaking out of a 2.5-year base to new all-time highs. As long as prices are above 1,200 we want to be buying the stock and looking to take profits near 1,625.

The last stock on our list is VIP Industries Ltd. which is meeting our secondary price target of 466 after breaking out of a 6-year base last July. While a pause can be expected, we want to be watching this stock and buying a breakout above 467 with a price target of 731.50.

The Bottom Line: While the Nifty Smallcap Index has under-performed large-caps as of late, there continues to be plenty of opportunity on the long side in individual names. Until this range in the Nifty Free Float Small-Cap 100 Index resolves itself, we want to focus on the names above where our risk is well-defined and the reward/risk is skewed in our favor.

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

Allstarcharts Team

Filed Under: