These stocks priced under Rs 50 are showing a bullish pattern by candlestick strength

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

Candlestick charts, or Japanese candlestick charts, were devised by—or are attributed to—Japanese rice trader Munehisa Honma, who made loads of money in Osaka in the 18th century.

Of course, he wouldn’t have imagined that nearly 300 years later, the candlestick charts would become the staple of studying patterns in the stock and currency market.

In simple terms, the candlestick captures the opening and closing price along with highs and lows of a stock. Analysts study patterns of these candlesticks to pick stocks.

One of the strategies that are used by technical analysts is to look at stock with good aggregate candlestick strength. This, in turn, is the value one derives from the net of bullish over bearish candlestick indicators.

If the number is in the positive quadrant and has a higher value it indicates the bullish pattern and vice versa for the number being in the negative side.

If we apply this to the broader list of stocks, we get a set of 104 companies that have a good aggregate candlestick strength of 2 or more, showing bullish trends. Most of these stocks are from the small and micro-cap list.

If we filter out companies by focusing on stocks with stock price under Rs 50 each, we get around 51 companies.

In this set, some of the companies include Bhagyanagar India, RKEC Projects, Piccadily Agro, Madhya Pradesh Today, Sagar Diamonds, Signet Industries, Anik Industries, Cindrella Hotels, Parshwanath Corp, AMJ Land Holdings, Bloom Industries, Octal Credit and Morarjee Textiles.

A few other stocks in the pack include Ashirwad Steels, Sellwin Traders, Ladderup Finance, Adinath Exim, Shivagrico, Vaksons Automobiles, Vinayak Polycon, K K Fincorp, Nexus Surgical, Gagan Gases, Cella Space, Ruchi Infrastructure and Marg Techno Projects.