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The relentless rally is still continuing in the Indian markets with the benchmark index rising 0.78% to 18,152, by 10:31 AM IST, which is the highest level since 18 January 2022. All sectoral indices are trading with gains as the risk appetite of investors is finally coming back.
In the midst of the sea of green numbers, many stocks are delivering breakouts and one such stock is ITI Limited. The company is a telecom equipment manufacturer and renders other associated services, having a market capitalization of INR 10,075 crores. The stock trades at a P/E ratio of 84.18, while its P/B ratio stands at 3.84. In FY22, ITI grew its net income to INR 119.69 crores, which is a massive jump of around 1,162% from the FY21 profit figure of INR 9.48 crores.
Image Description: Daily chart of ITI
Image Source: Investing.com
Today, the share price of ITI surged over 7.2% to INR 114 after the Department of Telecommunication (DoT) approved 42 entities for the production-linked incentive (PLI) scheme for telecom and networking products, in which the name of ITI is also there. The stock also rose above its falling trendline resistance which is a very healthy sign for the impending uptrend.
This trendline had been keeping the stock from rising for over 3 months which has finally been broken and the stock managed to scale above it. Now the bulls might start to charge higher which is also evident in the volume for the day so far, recorded at 3.04 million shares which is 665% higher than the 10-day average volume of 397K shares. This volume-led breakout is enough for the bears to step back and give way to the bulls for a continued up trend from here.
On the upside, there is almost an open ground till INR 125 as there are no major supply zones present below it. However, around INR 125, the stock could face some resistance on account of some selling pressure. As the stock is up over 7%, there is a possibility of a retracement, which might drag the stock to the breakout level of INR 108. This is the area where left-out investors would try to participate in the rally and hence would become an ideal demand zone.
Investors need to be cautious if the stock falls below the breakout level and sustains there for a long time.
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