BSE to zoom, witnesses trendline breakout!

On Tuesday, the stock jumped over 1% in otherwise a fragile market.

BSE Limited is a stock exchange company that provides a transparent market for trading in equity, debt instruments, derivatives and mutual funds. The company consists of two business segments: Stock Exchange activity and Depository activity.

On Tuesday, the stock jumped over 1% in otherwise a fragile market. It opened at a level of Rs 897 and marked an intraday low of Rs 884 and thereafter it bounced back to trade at a day’s high. The stock has witnessed a breakout of the downward sloping trendline formed by joining subsequent high from the all-time high levels.

The stock in the previous trading session had formed an inside bar (IB) and an NR4 bar. Inside bar because the day’s range was within the high & low of the prior trading session and NR4 as the day’s range was narrowest in the last four trading sessions. Usually, the formation of NR4+IB indicates contraction of volatility.

The fact that the stock has witnessed a breakout of a downward sloping trendline after a contraction of volatility, suggests that the stock is likely to head northwards. Interestingly, the stock has recorded a breakout along with robust volumes as the volume in the first half of the trading session, has surpassed the volume which was witnessed in the last trading session.

The stock is trading above its 50, 100 and 200-DMA. More importantly, all these moving averages are in the desired sequence and trending higher. The 14-period daily RSI has given a bullish crossover. The +DMI is above –DMI and ADX. An uptick in ADX shows improvement in the trend strength.

Going forward, the stock has stiff resistance placed in around levels of Rs 925.5 in the form of 20-DMA. Sustaining above this level is crucial for the stock and sustaining above this level can take stock towards levels of Rs 960 followed by Rs 1000 in the short term.

The stock is up by nearly 43% on a YTD basis, while on an MTD basis it is down by 3.5%.