Bulls Looking to Buy this 6% Gainer Amid ‘Fund Action’!
The sentiments of the broader markets are looking good as of now, with the index rallying 0.44% to 17,064, by 10:13 AM IST. The smallcap space is also making a buzz and one stock that is coming on investors’ radar is UTI Asset Management Co Ltd (NS:) which is an AMC with a market capitalization of INR 8,227 crores.
Yesterday, PPFAS mutual fund bought a 0.88% stake in the company for a total value of INR 71.4 crores. This is seen as a positive signal in the market as PPFAS is considered as one of the best fund houses in the industry. The market’s reaction is seen today as the stock jumped 5.15% to INR 670 and made a high of INR 689.3 which is the highest level since 21 February 2023.
Image Description: Daily chart of UTI Asset Management Company with volume bars at the bottom
Image Source: Investing.com
This sharp surge was also backed by volume expansion. In less than 1 hour of trading, a total of 951K shares have exchanged hands so far, which is 288% higher than the 10-day average volume of 245K shares.
What might work better in the favor of bulls is the current risk-to-reward ratio. The stock had consistently been falling from a high of INR 908, marked on 19 December 2022. This reflects a cut of 26% in 3 months, therefore, even from the technical point of view and ignoring the fund action, a technical bounce could materialize from here.
As the rally is expected to continue for a while, the stock could hit a level of INR 718 in the near term. However, this should not be deemed to be the end of the upside potential, but the view would further strengthen amid a break above this resistance. There is also a bullish divergence being formed at the bottom which would also help bulls take charge.
On the downside, if the stock breaks below the recent low of INR 631, then traders might want to take a relook at their long positions. As this is a small-cap counter, traders also need to watch out for volatility.
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