Technical Check: 140% in a year! This small-cap stock could rally by about 60% post range breakout in next 6 months

L.G. Balkrishnan & Bros. Ltd rallied over 140 per cent in the last year compared to about 21 per cent gain seen in the Nifty50 in the same period but the momentum is here to stay that could take it towards Rs 1,100 levels next 6 months.

L.G.B is a leading player in transmission products with its Automotive Timing and Drive Chains, Sprockets, Auto Tensioners, Guides, Fine Blanked Components, Precision Machined Parts, Belts & Rubber Products.

The smallcap stock with a market capitalization of nearly Rs 2,200 cr hit a 52-week high of Rs 724.65 on 24 January but pared gains in line with weakness in broader markets.

But, the stock has rallied over 17 per cent in the last 1 month and over 40 per cent in the last 3 months, which helped it to breakout from a 50-point range seen in January as it hit a high of Rs 724.

The stock is trading well above the short- and long-term moving averages of 30,50,100 and 200-DMA, which is a positive sign for the bulls.

The consensus recommendation from 2 analysts for LG Balakrishnan & Bros Ltd. is a strong buy, Trendlyne data showed.

In terms of shareholding data, foreign portfolio investors increased their holding from 5 per cent in the September quarter to 6.78 per cent for the quarter ended December 2021.

Fund managers of top mutual funds pared their holding from 12.19 per cent in the September quarter to 11.81 per cent for the quarter ended December 2021.

The stock price started its up move from 404 (Sept 2021) to 714 (Jan 2022), making a series of higher bottoms and higher tops.

During the move, the 200-DMA was continuously in rising mode and the Super trend was in a positive mode, which is a bullish sign.

From Nov to Dec 21, the stock traded in the range of 450 to 550 Price Zone, and again resumed its Up Trend with above-average Volumes.

“Recently the stock gave Range breakouts & made a high of 724 accompanied by supportive volumes. The KST, Aroon Up/Dwn & ROC Indicator suggests a Possibility of Strong up Move on Positive side move. The possible targets are 1100,” Bharat Gala, President - Technical Research, Ventura Securities Ltd, said.

“If the stock price corrects downwards the buy levels are (685-666)-651-(636-628). A stop loss to be observed in the trade is 618,” he said.

(Disclaimer: The views/suggestions/advices expressed here in this article is solely by investment experts. Zee Business suggests its readers to consult with their investment advisers before making any financial decision.)