Chart Check: After 170% rally, this smallcap stock could now cross Rs 1,000

The rally in smallcap textile stock Siyaram Silk Mills Ltd, which is up over 170 per cent in a year compared to about 22 per cent upside seen in Nifty50, may not be over yet and investors can stay put for a possible target above Rs 1,000 in the next 6 months, suggest experts.

The smallcap stock with a market capitalisation of nearly Rs 2,700 crore hit a 52-week high of Rs 607 on 11 April. The momentum helped the stock to break past its trendline connecting from April 2018-April 2022 on the monthly charts.

A break above the trendline signals changes in the trend of an underlying which could be a stock or an index. However, traders need to keep an eye on volumes as trendline breakout with low volumes might fail to get follow-through.

Siyaram Silk Mills, which was trading well above Rs 700 levels back in May 2018, saw selling pressure which pushed the stock below Rs 100 in May 2020. But, value buying at lower levels helped the stock push through resistance levels to hit a fresh 52-week high in April.

The fabric and apparel manufacturer has created a strong brand portfolio largely catering to the Tier II & III towns. Over the last decade, the company has gradually expanded its fabric and garment capacities and simultaneously managed to reduce the debt/equity from 1.0x in FY12 to 0.2x in FY21, ICICIdirect said in a report.

In terms of price action, the stock is trading above its crucial short and long-term moving averages placed at 26, 50, 100, and 200 days, which is a positive sign.

The stock is well poised for a bigger up move towards Rs 1,000 and investors holding the stock can remain invested while fresh money can be deployed now or on dips towards Rs 400 for a possible target towards Rs 1,100 in the next 2 quarters, suggest experts.

The stock started its up move from Rs 36 (Aug 2013) to Rs 799 (Dec 2017), trading continuously above averages.

“The stock made a lower top at Rs 763 in April 2019 and the price corrected to Rs 94 in May 2020. Value buying followed and stock steadily moved upwards to Rs 531 in Feb '22,” Bharat Gala, President - Technical Research, Ventura Securities Ltd, said.

“Recently, the stock gave a trendline breakout connecting the years 2018 and 2022. The MACD, KST & Aroon Up/Down Indicators suggest the possibility of a strong positive up move. The possible targets are Rs 800-1,100,” he said.

Gala further added that if the stock corrects downwards, then the buy levels are Rs 518-Rs 494 - Rs 476 - Rs 455-445. Stop loss for the trade is recommended at Rs 400.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)