Bata, MGL: Bollinger Band shows 37 mid, small-cap stocks may surge over 25%

Nifty Mid and Small caps 100 are showing strong upside.

One of the momentum indicators used in technical analysis of stocks is Bollinger Band. Bollinger Band (BB) helps to ascertain the volatility with the support of standard deviation. Herein, the upper band defines the higher range that a stock can deviate from the mean and vice versa. Besides ascertaining the price range and volatility, Bollinger Band also reflects the breakout in the form of “Expansion” and “Contraction” formation. 

Expansion of Bollinger Band indicates a wide opening of the bands in the opposite direction with price rigorously following a strong trend. This scenario occurs normally after a sideways movement or consolidation. This phase helps to build the support levels for an unexpected upside rally that can see a surge of over 25 per cent from a medium-term perspective.

Few stocks in the Nifty Mid-cap 100 are showing an expansion of BB. The list includes names such as Bata India Limited, Godrej Properties Limited, Manappuram Finance Limited, Mahanagar Gas Limited, among others. Further, stocks from Nifty Smallcap 100 such as Bajaj Electricals Limited, Century Plyboards (India) Limited, Cyient Limited, EID Parry India Limited, PNB Housing Finance Limited, Rain Industries Limited, Sobha Limited, and Wockhardt Limited are also exhibiting BB Expansion.

The S&P BSE SmallCap index has outperformed the market with a rally of over 86 per cent from its lowest intra-day level in March to 16,003 levels now. The S&P BSE MidCap index has moved up 70 per cent during this period — mostly in line with the S&P BSE Sensex that has gained around 72 per cent, shows the data.

And, despite a sharp rally, analysts still remain bullish on mid- and small-caps and expect them to outperform large-caps in 2021. Though there can be intermittent corrections, stock selection will be key. Portfolio returns, say analysts at Morgan Stanley, are more likely to be driven by bottom-up stock-picking rather than top-down macro forces. 

Here are the lists of stocks showing Bollinger Band (BB) Expansion

Nifty Mid-cap 100 stocks in BB expansion,
source: www.spidersoftwareindia.com

Nifty Small-cap 100 stocks in BB expansion
source: www.spidersoftwareindia.com