In just the last six months, the stock has delivered impressive multibagger returns of 250%. Last week, it rallied 33%, though it experienced some profit booking in Monday’s session, falling by 1.5%.
“The profit booking in Balu Forge on Monday has to be looked at with a hawk’s eye in the stellar rally that the stock has had. If there is follow through selling and we see prices break the Rs 740 mark in the coming days, we can quickly see another 10% on the downside in this counter,” said Rahul Ghose, CEO of Hedged.in while commenting on the stock’s recent rally.
Ghose further added that after the 10% dip, around Rs 670-680 levels, one should look to see if there is a closing happening below the bollinger band indicator with any week candlestick formation, which might cause another round of selling in the stock (however price action should be looked at keenly over here).
“On the contrary, if prices go higher above the Rs 800 levels and sustain above there, the upward momentum can see one more leg as well. The next few days hence becomes crucial from the stocks next movement perspective,” Ghose added.Also read: World-beating Indian energy stocks rally has fuel for more gains
Earlier in the month of July, the company had announced its June quarter results wherein the company had posted an 105% increase in its profit after tax at Rs 16.68 crore against Rs 34 crore in the year-ago period.
The company’s revenue from operations had also increased to Rs 175.31 crore, up by 56% YoY.
Following this, the stock has surged by 77.4% in the last one month.
“Balu Forge has been in a consistent uptrend for the past two months, surging significantly from around Rs 350 to nearly Rs 850. The current price action, supported by volume, suggests that this upward momentum is likely to persist,” said Ajit Mishra, SVP, Research at Religare Broking.
For those with existing positions, Mishra suggested maintaining a closing stop loss at Rs 700 and continuing trailing the stop loss as the price rises. Additionally, for new positions, it would be prudent to wait for some consolidation to establish a better entry point.
Balu Forges’ 57% of the equity lies in the hands of the promoter and the promoter group while the remaining rests in the hands of the public shareholders, among which ace investor Ashish Kacholia holds a 2.09% stake in the company, as ofJune 30, 2024.
Kacholia holds nearly 21.9 lakh shares of the company and has been an investor since July 2023, according to the Trendlyne data.
Technically, the stock is well placed on the charts performing above all its significant short, medium and long term exponential moving averages and oscillating near the 85 level on the relative strength indicator (RSI), which is a strongly overbought zone on the indicator.
The shares of Balu Forge were trading 3.35% higher at Rs 790 on BSE around 1:30 pm on Tuesday.