Technical Check: This small cap stock returns 275% in a year! A breakout from rectangle channel makes it an attractive buy

Stock of Aurionpro Solutions Ltd has rallied 275 per cent in last 1 year compared to 26 per cent gains seen in the Nifty50 in the same period. 

The smallcap stock in IT space with a market capitalization of nearly Rs 800 cr hit a fresh 52-week high of Rs 336.80 on 5 January. It was locked in upper circuit if 5 per cent on Wednesday.

The stock of this technology products and solutions provider has been in a consistent uptrend rising 23 per cent in just a week, and over 50 per cent in the last 3 months.

The vertical rise seen in the stock helped it pass through crucial technical levels leading to a breakout from a rectangular channel breakout. The momentum could push the stock towards 412-460 in the next 2-3 months, suggest experts.

A rectangular channel is a technical pattern in which horizontal lines are drawn showing significant support and resistance levels. The pattern highlights that the stock trades in a range on the upside and downside.

A rectangle ends when there is a break above the channel resistance line, and the price moves out of the rectangle formations.

While some of the industries have been hit hard due to covid, the IT space has in fact, gained an advantage of it. In the last two years we have seen mesmerizing moves from heavyweight as well as from mid and small IT space.

“We sense this dream run is likely to continue and hence we continue to focus on this basket. The stock prices of AURIONPRO have given a mesmerizing 220% returns in the calendar year 2021 and the way the long term charts are placed it seems the move has just started,” Rajesh Bhosale, Technical Analyst, Angel One Ltd, said.

If we analyze the quarterly charts, the stock prices since last more than 13 years were gyrating in a broad range of 40 and 260.

“Both these levels acted as strong support and resistance during this long tenure and eventually we are now witnessing a range breakout on the upside confirming a long term breakout. This pattern can be termed as ‘Rectangular’ Channel’ breakout on the Quarterly charts,” highlighted Bhosale.

“On the daily charts, recently the prices had a price correction and has resumed upmove by crossing its previous swing high hence the RSI oscillator is in positive zone but far from overbought zone indicating a potential of strong upside from current levels,” he said.

Considering all the above scenarios, this technical analyst is upbeat on this counter for a strong upmove in the long term as well in the near term. Traders can buy at current levels and on a dip to 273 for a target of Rs. 412 and Rs. 460. The stop loss can be placed at Rs. 235.

(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.)