Praj, Delta Corp: Trading strategies for 5 overbought NSE smallcap stocks

Outlook on Nifty smallcap stocks: Delta Corp, Eris Life, Praj and Usha Martin can rally up to 28 per cent, while Symphony may witness a corrective move in the near-term; suggests technical charts.

The Nifty SmallCap index has surged nearly 7 per cent so far in June amid the rally in the equity market after Lok Sabha elections voted the Narendra Modi-led alliance for a record third-term at the Centre. In comparison, the NSE benchmark, Nifty 50 index has gained 3.9 per cent in the same period.

Within the SmallCap space, as many as 118 out of the 250 stocks, have outperformed the SmallCap index with gains in excess of 7 per cent so far. Praj Industries with a gain of 31 per cent is the top performer so far in June 2024.

Home First Finance Company, Tejas Networks and Shree Renuka Sugars have rallied 23 - 25 per cent each. Sunteck Realty, Varroc Engineering, KNR Constructions, Bikaji Foods and Whirlpool have surged around 20 per cent each.

Amid the sharp gains, a total of 32 smallcap stocks are seen trading in overbought zone, basis on the 14-day RSI (Relative Strength Index) parameter. The RSI is a momentum oscillator that measures the speed and change of price movements. Technically, a RSI reading above 70 is considered overbought, while a reading below 30 is considered oversold.

Among these 32 stocks, here's a trading guide on 5 such smallcap stocks which as of June 13 have a RSI reading in excess of 70.

Delta Corp

Last close: Rs 135.20

Upside Potential: 28%

Support: Rs 128; Rs 121

Resistance: Rs 138.60; Rs 157

After 11 long months, Delta Corp stock yesterday tested its 200-DMA (Daily Moving Average) for the first time. The stock hit a high of Rs 138.90 on June 13, while the 200-DMA stands at Rs 138.60. Going ahead, the stock will need to cross and sustain above its 200-DMA on a consistent basis for the overall sentiment to turn favourable at the counter. CLICK HERE FOR THE CHART

Key momentum oscillators on the weekly chart are in favour of an uptrend. Hence, the stock may attempt a rally towards Rs 157 levels in the near-term; above which the stock can spurt to Rs 173 levels. 

In case of a downturn, the stock may seek support around its 100-DMA at Rs 128, below which a key support stands at Rs 121. Break and trade below Rs 121 can dismantle hopes of a sustained revival in Delta Corp stock.

Eris Lifesciences

Last close: Rs 1,023

Upside Potential: 12.4%

Support: Rs 980

Resistance: Rs 1,040

After a smart rally, Eris Lifesciences stock seems to have entered a consolidation range, wherein the stock may trade sideways between Rs 980 - Rs 1,040. As long as the lower-end of the anticipated range is protected, the trend is likely to be positive for the stock. CLICK HERE FOR THE CHART

On the upside, break and sustained trade above Rs 1,040 levels, can trigger a fresh led of rally with an upside target of Rs 1,150-odd levels.

Praj Industries

Last close: Rs 686

Upside Potential: 16.6%

Support: Rs 650; Rs 618

Resistance: Rs 707; Rs 753

Praj Industries stock is seen trading above the higher-end of the Bollinger Bands on the daily scale. The near-term bias is likely to remain bullish as long as the stock sustains above Rs 650 levels, below which the next key support stands at Rs 618. CLICK HERE FOR THE CHART

The yearly Fibonacci chart suggests, the stock can potentially rally all-the-way to Rs 800, with interim resistance seen at Rs 707 and Rs 753.

Usha Martin

Last close: Rs 415

Upside Potential: 21.7%

Support: Rs 394; Rs 378

Resistance: Rs 425; Rs 459

Usha Martin stock has given a fresh breakout on the daily scale. The near-term bias is likely to remain positive as long as the stock holds above Rs 394; below which the next major support exists at Rs 378 levels. CLICK HERE FOR THE CHART

The stock is currently trading at life-time highs, and can rally to Rs 505 suggests the yearly Fibonacci chart. Interim resistance is seen at Rs 425 and Rs 459.

Symphony

Last close: Rs 1,242

Downside Risk: 9.4% 

Support: Rs 1,160

Resistance: Rs 1,350; Rs 1,380

Symphony stock seems to be towards the end of the current rally, with key momentum oscillators showing signs of fatigue on the daily charts. The near-term bias is likely to remain positive as long as the stock holds above Rs 1,237 levels. Failure to sustain above the same, can trigger a corrective move at the counter. CLICK HERE FOR THE CHART

As such the stock may dip to Rs 1,160 levels, below which a fall to Rs 1,125 cannot be ruled out. On the upside, the stock is likely to face considerable resistance around Rs 1,350 - Rs 1,380 zone.