Inverse H&S Predicts ‘52-Week Low Reversal’ in this Power Stock!
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What could be a better time to hunt for stocks for long opportunities, than when the broader market index is an inch away from marking a new all-time high? As the index is up at 18,345, by 2:32 PM IST, there is no dearth of companies that are gaining investors’ confidence.
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One such stock is from the power sector, Indian Energy Exchange Limited (NS:) which is a small-cap power trading exchange with a market capitalization of INR 12,564 crores. It is one-of-a-kind listed stock on the NSE and currently trades at a P/E ratio of 40.63 and posted a stellar FY22, reporting the highest-ever revenue and profit of INR 491.83 crores and 309.26 crores, respectively.
Another best thing about the company is its profit margins, which remained at a massive 62.88% in FY22. That’s incredible! Looking at the EBITDA margin, it’s at 85.98%. FIIs also hold a 15.79% stake in the company while mutual funds have a 17.69% stake, as of September 2022.
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Image Description: Daily chart of IEX
Image Source: Investing.com
Coming to the daily chart of the stock, there is a formation of an inverse Head & Shoulders pattern which is a very promising reversal formation. This is one of the best signs to look out for in order to sport a high probable reversal from the bottom. An Inverse H&S is a mirror image of the more popular Head & Shoulders pattern which is known to reverse an uptrend.
The place at which these patterns form on the chart also holds importance and contributes to increasing/decreasing the reliability of the impending move from breakout. Simply, the lower an Inverse H&S pattern forms on a chart, the better could be the reversal. In the case of IEX shares, the pattern has been formed at the 52-week lows, therefore an up move from here could be big in magnitude.
As of today, the stock is in the last phase of completion of this pattern and is making the right shoulder. Once this gets complete, the breakout above the neckline resistance of around INR 146 would finally mark a reversal from here. A successful reversal could easily propel the stock toward the nearest resistance of INR 155 fairly quickly. On the downside, if the stock falls below the right-shoulder low of INR 138.85, the pattern would fail.
What could be a better time to hunt for stocks for long opportunities, than when the broader market index is an inch away from marking a new all-time high? As the index is up at 18,345, by 2:32 PM IST, there is no dearth of companies that are gaining investors’ confidence.
One such stock is from the power sector, Indian Energy Exchange Limited (NS:) which is a small-cap power trading exchange with a market capitalization of INR 12,564 crores. It is one-of-a-kind listed stock on the NSE and currently trades at a P/E ratio of 40.63 and posted a stellar FY22, reporting the highest-ever revenue and profit of INR 491.83 crores and 309.26 crores, respectively.
Another best thing about the company is its profit margins, which remained at a massive 62.88% in FY22. That’s incredible! Looking at the EBITDA margin, it’s at 85.98%. FIIs also hold a 15.79% stake in the company while mutual funds have a 17.69% stake, as of September 2022.
Image Description: Daily chart of IEX
Image Source: Investing.com
Coming to the daily chart of the stock, there is a formation of an inverse Head & Shoulders pattern which is a very promising reversal formation. This is one of the best signs to look out for in order to sport a high probable reversal from the bottom. An Inverse H&S is a mirror image of the more popular Head & Shoulders pattern which is known to reverse an uptrend.
The place at which these patterns form on the chart also holds importance and contributes to increasing/decreasing the reliability of the impending move from breakout. Simply, the lower an Inverse H&S pattern forms on a chart, the better could be the reversal. In the case of IEX shares, the pattern has been formed at the 52-week lows, therefore an up move from here could be big in magnitude.
As of today, the stock is in the last phase of completion of this pattern and is making the right shoulder. Once this gets complete, the breakout above the neckline resistance of around INR 146 would finally mark a reversal from here. A successful reversal could easily propel the stock toward the nearest resistance of INR 155 fairly quickly. On the downside, if the stock falls below the right-shoulder low of INR 138.85, the pattern would fail.
