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One of many hottest IPOs of the final yr was Sona Comstar (Sona Coms), also referred to as Sona BLW Precision Forgings Ltd (NS:). Sona Coms shares have been issued at INR 291 and listed at a premium of round INR 10, at INR 301 on the NSE, again in June 2021.
The share value of Sona Coms began its bull run the second it hit the Indian bourses. For the reason that inventory debuted on the NSE and BSE, it had solely been making new highs, not giving any significant dip to traders to take part within the rally. Because the Sona BLW share value stored on gaining momentum, it additionally attracted loads of new traders who stored on chasing the worth, leading to additional fueling of the rally in the direction of highs.
Nonetheless, as this yr hasn’t been good for the equities market world wide and plenty of shares have corrected considerably from their highs, Sona BLW shares additionally witnessed traders liquidating their holdings. The tip result’s that after always-rallying inventory began to lose momentum and retraced virtually 38% from its all-time excessive of INR 839.9, marked in mid-December final yr.
Picture Description: Day by day chart of Sona Coms with quantity bars on the backside
Picture Supply: Investing.com
Nonetheless, after falling to a latest low of INR 519.05 on 26 Could 2022, the inventory began to see the next stage of demand kicking in. Buyers who missed the earlier rally in all probability have been attempting to make full use of this dip, therefore the inventory began to get well from the low. However a small restoration from an honest correction shouldn’t be considered as a sign for a pattern reversal.
To begin with, the inventory remains to be within the main construction of decrease lows and decrease highs, which portrays a traditional downtrend formation. As might be seen from the chart above, the Sona Coms shares have been following this formation since they began to fall from the highs and are but to interrupt their earlier peak of round INR 708. Except the inventory breaks this peak, the first construction of a downtrend stays intact.
An early sign of a pattern reversal might be taken from the falling trendline breakout. Regardless of a restoration from the latest fall, the shares of Sona BLW are nonetheless buying and selling under the falling trendline resistance. This additionally reveals that the inventory must surge previous this resistance stage with a purpose to mark a reversal, no less than for the quick time period.
Coming to the help ranges, there are lots of small help ranges beneath the latest low, however not significant ones. This is because of the truth that the earlier rally has been so sharp and fast, that the inventory didn’t retrace noticeably to type a note-worthy help stage. Nonetheless, the present help at INR 520 is the strongest one as of now.
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