These 5 small-cap stocks look set to rally further despite 30% jump in May

With a 20 per cent jump on June 1, 2021, the stock of PNB Housing Finance has conquered the resistance of Rs 600 levels.

If one followed the famous "Sell in May and go away" investment strategy, hoping that bears would return to the Street amid a second wave of Covid-19, then they must be regretting that decision. As it turned out, the benchmark Sensex and Nifty50 indices posted their biggest monthly gain of 2021 at 6.5 per cent last month and delivered returns better than their global peers. 

Moreover, the rally was not just restricted to large-caps. The small- and midcaps continued to outperform even as the gap between them narrowed significantly compared to the previous month. The Nifty SmallCap100 index, for instance, surged 8 per cent on the NSE in May with over 60 constituents outperforming the index. These included BSE, Gateway Distriparks, Adani Transmission, JK Lakshmi Cement, Indiabulls Real Estate, Coforge, Avanti Feeds, PVR, ITI, PNB Housing Finance, Birla Corporation, Lux Industries, Ashoka Buildcon, and Balrampur Chini Mills that advanced between 9 per cent and 60 per cent, ACE Equity data show. 

Given below are trading strategies for the stocks that have surged over 30 per cent in the past month and whether or not one should book profit: 

PNB Housing Finance Ltd (PNBHOUSING)

Likely target: Rs 675

Upside potential: 7%

With a 20 per cent jump on June 1, 2021, the stock has conquered the resistance of Rs 600 levels. This move has now opened door for further upside towards the next resistance of Rs 675. The overall trend indicates bullishness, which shall remain intact as long as it holds the support of Rs 600-mark. That said, as the weekly Relative Strength Index (RSI) has entered the overbought territory, one can expect mild profit booking. However, this is unlikely to affect the overall optimism. CLICK HERE FOR THE CHART
 
Birla Corporation Limited (BIRLACORPN)

Likely target: Rs 1,350 and Rs 1,420 levels.

Upside potential: 9.50% - 15%

The stock has broken out with the formation of a "Rising Channel Pattern", as per the weekly chart, suggesting a strong momentum in the forthcoming months. The overall trend is heading towards Rs 1,350 and Rs 1,420 levels. The uptrend has been supported by phenomenal volume activity, indicating strong interest of market participants. CLICK HERE FOR THE CHART
 
Chambal Fertilizers & Chemicals Limited (CHAMBLFERT)

Likely target: Rs 320 and Rs 330

Upside potential: 6.50% - 10%

As the stock has broken out of the resistance, placed at Rs 270 levels, one can expect a positive momentum going ahead. However, the RSI has fallen below the overbought territory hinting at mild profit booking. One can use this oppotunity to create fresh positions in the stocks. A firm close above Rs 300 mark may open doors for the uncharted territory of Rs 320 and Rs 330 levels. CLICK HERE FOR THE CHART
 
JK Lakshmi Cement Limited (JKLAXMI)

Likely target: Rs 580 and  Rs 620

Upside potential: 7.50% - 14.81%

The recent rally has helped the stock to conquer the closing basis resistance of the Rs 520 levels, as per the monthly chart. This has helped the stock to build a positive trend for the next several months. Moreover, any weakness can be viewed as an opportunity to add positions for long-term gains. While the immediate support is seen at Rs 520, the stock may rally towards Rs 580/ Rs 620/ Rs 660 levels in the medium term if it upholds the support of Rs 470. The Moving Average Convergence Divergence (MACD) has conquered the zero line upward, indicating an upward direction. CLICK HERE FOR THE CHART
 
Lux Industries Ltd (LUXIND)

Likely target: Rs 3,200

Upside potential: 6.50%

As the counter surged over 50 per cent in the last week of May, one can see some profit boking. That said, the overall trend looks bullish as the counter witnessed buying momentum with increased volumes. The immediate support comes at the Rs 2,800 level with price seeing reversal towards Rs 3,200 levels.  CLICK HERE FOR THE CHART