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While today’s session was a good one for a lot of investors, shareholders of Bharat Gears (NS:) were cock-a-hoop. The index ended Monday’s session 0.55% up at 9,709.5, but the share price of Bharat Gears hit an upper circuit of 20% to INR 145.85, significantly outperforming the small small-cap index.
It is an auto parts manufacturer with a market capitalization of a mere INR 186 crores. Being a small company, it is a volatile stock and today, this highly volatile nature seemed to have favoured the bulls big time. This company is also on the radar of Foreign Institutional Investors (FIIs) as they are consistently ramping up their stake in the company quarter after quarter. They owned 0.85% of the company as of the end of the September 2021 quarter which jumped to 1.61%, by the September 2022 quarter. Although the stake is not much, this continued stance to accumulate shares of Bharat Gears is confidence-building.
Image Description: Daily chart of Bharat Gears with volume bars at the bottom
Image Source: Investing.com
Coming to today’s price action, the stock surged to 20% UC and stayed there till the closing as the demand was exorbitantly higher and outstripped the supply. As the stock spiked, it also sliced through the falling trendline resistance on the daily chart which is the signal of a trend reversal from the prior downtrend to an upcoming uptrend.
After making an all-time high of INR 172.65 in September 2022, the stock started to fall as it came under the firm grip of the bears, hitting a low of INR 108 last month. However, today’s surprise move caught the bears off guard and the stock rose to the highest level permitted by the exchange for the day. The volume for the day was recorded at a whopping 2.31 million shares, which was the highest one-day volume since 14 September 2022. It was also 3,882% higher than the 10-day average volume of 58.4K shares.
As the stock is in momentum, there are high chances of a continued rally from here, which could eventually help the stock to scale to the next resistance of INR 163. However, investors also need to know, in case a retracement comes from here, it could also be sharp, owing to the highly volatile nature of the stock. Hence, attempting to catch a bottom in case of profit booking should be done carefully. A level of INR 128 seems to be a decent support, as of now.
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