Penny Stock Closes Week with 15% Gain; More Potential Left!
The second week of January ended slightly better than the previous one, with the gaining 0.51% to 17,956 in 5 days. Throughout the week, sector rotation was seen as investors kept jumping from one sector to another and therefore stock-specific action kept investors on their toes to hunt for the next opportunity.
One penny stock that ended the week with a stellar rally is Lloyds Steels Industries Limited (LON:), which has also been covered in the past. The company manufactures heavy equipment, systems and machines for hydrocarbon, oil & gas, steel & power plants etc, and has a market capitalization of INR 1,715 crores.
I analyzed the stock on 9 December 2022 when it was trading around INR 14.5 for the upside potential till INR 18, which was very strong resistance. After surging to this level and romancing with it for some time, today, the stock has finally managed to break above this resistance as well and delivered yet another breakout which again makes it a good candidate for a stupendous rally.
Image Description: Daily chart of Lloyds Steels Industries with volume bars at the bottom
Image Source: Investing.com
This time the breakout has appeared on the weekly chart, as the stock rose 8.65% today to INR 18.85, supported by a heavy volume of 10.62 million shares, which is the highest one-day volume since April 2022. Today’s high is also the highest level since February 2022, depicting the strength of the current momentum.
As the stock has closed the week with a 15.8% rally and closed above the resistance, the bulls might see a level of INR 20.5 on the screen next week but it probably won’t be an end to the it. The second level of around INR 22.5 – INR 22.6 is also not far to be hit and as this is a penny stock with very high volatility, the second level could also be touched in the next week.
Despite a bullish picture, traders must not forget to adhere to proper risk management. The support at around INR 15.5 – INR 16 seems to be a decent one to be used as an exit level in case things don’t go as planned. This level is spotted on the daily chart, as for the weekly one, there are no strong support levels in the vicinity, till INR 12.5.