Invest for 1 month, you can get strong returns of up to 12%! Brokerage bullish on shares of market leader company

Amidst the fluctuations and sectoral rotation in the domestic stock market, an attractive earning opportunity has emerged for short-term investors and swing traders. Given the strong quarterly financial results of the sector giant and market leader large-cap company, strong growth in order book and strong technical chart structure, leading brokerage firms have issued ‘Buy’ rating on the stock. Analysts believe that from current levels the stock may see a potential upside return of 10 to 12 percent within the next 3 to 4 weeks (about 1 month).

Whenever there is widespread uncertainty or consolidation in the market, investors prefer to turn to market leader companies for safety and liquidity. Such companies’ strong cash flows, debt-free or low-debt balance sheets and market share dominance provide them with strong cushion during any downturn. According to the brokerage house, the stock has crossed its key resistance level and the volume breakout is confirming that institutional investors (FIIs and DIIs) are making aggressive buying in this counter.

From a technical analysis perspective, the company’s stock is trading above all its key moving averages—the 20-day and 50-day exponential moving averages (EMA). Coming out of the recent consolidation phase, the stock has recorded a breakout of a classic ‘bullish flag’ and ‘cup and handle’ pattern.

Momentum indicator Relative Strength Index (RSI) remains above the 60 level on the daily and weekly charts, clearly indicating bullish momentum. Apart from this, positive crossover has been seen on MACD, due to which there is every possibility of further rise in prices in the coming days. Delivery volumes have increased by more than 40% over the past two weeks, making it clear that this surge is the result of genuine accumulation and not just intraday speculation.

The company’s fundamental figures are also fully supporting this bullishness:

• Strong Revenue Growth: The company has posted better revenue growth than the industry average in the last quarters.

• Improvement in Operating Margin: Due to stable raw material prices and operational efficiency, the company’s EBITDA margin has seen an improvement of 150 to 200 basis points.

• Domestic and global demand: Due to the festive season and being engaged in the sector related to government capex expenditure, the company’s order book has reached an all-time record level.

• Increase in market share: This market leader is getting the biggest benefit from the shift from unorganized sector to organized sector, due to which its pricing power remains strong.

The brokerage house suggests a disciplined trading strategy for investors and traders with a 1-month timeframe:

Experts say that discipline is most important in short-term trading. If there is any broader geopolitical or macro-economic shock in the stock market, the fixed stoploss should be strictly followed so that the capital remains safe.

Although the company is fundamentally strong and a leader in its sector, any return in the equity market is not 100% guaranteed. Short-term investing can always be influenced by overall market sentiment, selling by foreign investors and global signals (such as interest rates or crude oil prices). Therefore, retail investors should invest only a portion of their risk-tolerant spare capital instead of investing their entire capital in any stock and must consult their registered financial advisor before investing.