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Although the benchmark 50’s morning session rally fizzled out by the closing, one stock that ended the day with decent gains and is further showing potential for a quick move is Happiest Minds Technologies (NS:). It is a small-cap IT company with a market capitalization of INR 11,984 crores and trades at a P/E ratio of 66.14, compared to the industry’s average of 27.53.
The company reported a 28.19% YoY jump in Q3 FY23 revenue to INR 374.68 crores while net income jumped 17.7% to INR 57.58 crores, translating into a profit margin of 15.37%, compared to 16.74% a year ago. FIIs were seen marginally increasing their stake to 4.08%, from 3.94% in the preceding quarter.
Image Description: Daily chart of Happiest Minds Technologies with volume bars at the bottom
Image Source: Investing.com
The share price of Happiest Minds Technologies jumped 2.38% to INR 855.6 in today’s session after a short period of consolidation. Since 19 January 2023, the stock has been moving sideways as buying from the lower levels and selling from the higher levels kept it going nowhere. This rangebound trading lasted for a little less than a month.
The range of the stock during this sideways period kept on contracting which reflected a volatility suppression, and eventually, the stock formed a small symmetrical triangle chart pattern on the daily chart. This pattern is reflecting the suppressed volatility of the stock which could eventually propel it in one direction.
Today, the stock tried to break above the falling trendline resistance but profit booking from the upper end led it to close minutely below the trendline. The volume for the session also picked up, with the NSE reporting a figure of 323.5K shares, more than double the 10-day average of 140K shares.
This counter should remain on the watchlist of bulls as it is showing a potential to rally from here. A closing above the trendline is required to increase the reliability of the move. As per the dimensions of the pattern, the stock could spurt to INR 920 in a jiffy. On the downside, the lower trendline of the triangle could be extended to be used as a trailing stop-loss level.
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