Stocks priced under Rs 20 with dragonfly doji pattern and potential upside

The Indian stock market has been trying to regain all of the lost momentum and has scaled back after seeing a bottom at about 15% below the peak level attained a few times over the last twelve months. With the rally on Monday, the benchmark indices are just 4% below the all-time high.

Investors who bank on technical analysis or patterns in the price and volume movements of a stock typically use candlestick charts or use it along with other parameters to predict price movements of stocks in the future.

One such parameter is the ‘dragonfly doji’, a Japanese candlestick pattern which hints at the possibility of a trend reversal. On the candlestick chart it has a ‘T’ shape due to a trading day that starts with a decline and then a reversal to close right near the opening price.

If we twine it with a bearish trend like the market has behaved in the recent past it could suggest some stocks that could see an uptick.

If we apply this to all the stocks, we get a set of 95 companies. Of these there are just one large cap: tyremaker MRF and one mid-cap: Anupam Rasayan. Rest all are small and microcap firms with many being penny stocks.

Filtering them further for penny stocks that are priced less than Rs 20 a share and have a market value less than Rs 25 crore we have around 38 companies.

These include names like K-Lifestyle, Shekhawati Poly Yarn, Sun Retail, Antarctica, Radaan Mediaworks, Tricom Fruit Prod, Galada Power, Sri Havisha Hospital, Silver Oak Commercial, Hi-Tech Winding, Mauria Udyog and Uttam Galva Steels.

Others in the pack include Madhusudan Sec, KMF Builders, Hasti Finance, RLF, Shree Hanuman Sugar, Creative Eye, Premier Capital, Velan Hotels, Super Tannery, Rich Universe, Mahalaxmi Seamless, Ozone World, Nihar Info Global, Aananda Lakshmi, Shree Karthik Papers, Helpage Finlease, Tine Agro, Coral Newsprints, NEO Infracon, Southern Infosys, Shree Krishna Paper, Lippi Systems, Cosyn, MPDL and NMS Resources.