Bullish Engulfing After 31% Crack, Stock Gains from 52-Week Low!

As the broader markets are witnessing profit booking, going essentially nowhere for the last many days, traders looking for some action should have a closer look at the mid-cap and small-cap spaces, where there is no dearth of long opportunities.

Page Industries (NS:PAGE), which is an apparel company, especially famous for the innerwear brand Jockey is now coming on investors’ radar. The company has a market capitalization of INR 42,340 crores and currently trades at a P/E ratio of 78.91 and it has always been commanding higher premiums on the valuation front. Currently, it is the second-most expensive stock (price-wise) on the NSE, after MRF (NS:MRF) Limited.

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Image Description: Daily chart of Page Industries with volume bars at the bottom

Image Source: Investing.com

The stock had taken a decent beating in the recent past, especially after it marked its all-time high of INR 54,349.1 on 21 October 2022. Since then, investors started booking profits, probably on the back of stretched valuations which ultimately led the stock to crash 31% to a 52-week low of INR 37,170, marked in today’s session.

This one-way fall was quite consistent and investors who got stuck at the higher levels might not have gotten a chance to make a profitable exit. However, these current levels might not be ideal to book loss but to patiently wait for a bounce-back. The stock surged 4.02% to INR 39,506, by 12:30 PM IST, making a bullish engulfing candlestick pattern.

It is a reversal pattern and gives a ray of hope to bulls, especially when it forms somewhere around the bottom. In the case of Page Industries, it has formed at the 52-week low which further maximizes the potential of an impending reversal from here.

A bullish engulfing is a two-candlestick pattern wherein the recent candle opens below the close of the preceding candle and closes above the open of the preceding candle. Visually, it gives the appearance of a green candle’s real body fully engulfing the preceding red candle’s real body. As the market hasn’t been closed yet, the stock could fall before Friday’s close which would distort the pattern

However, even if it closes halfway up through the preceding candle’s real body, it would still form another bullish candlestick pattern – A piercing candlestick pattern. Now, as a reversal is on the cards, a rally to INR 42,650 has a high probability, and as long as today’s low is intact, looking for short opportunities is not recommended.

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