Technical Check: This smallcap Budget 2022 pick forms Rounding Bottom bullish breakout; 30% upside possible in 2-3 months

D-Link India Ltd rallied by about 60 per cent in the last 1 year compared to 25 per cent upside seen in the Nifty50 in the same period. 

The stock rallied almost 20 per cent in the last month in anticipation of some big measure from Budget 2022 could still add more gains based on the technical parameters.

The momentum could take the stock above its current 52-week high of Rs 193.95 to hit Rs 237 that translates into an upside of over 30 per cent from Rs 178 recorded on 16 January, suggest experts.

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The smallcap company with a market capitalisations of more than Rs 600 crore hit a 52-week high of Rs 193 on the BSE on 3rd January. The recent price action helped the stock breakout from a Rounding Bottom formation, which is a positive for bulls.

D-link is a well-known brand in the WiFi-router business and has a huge market share in that segment. It also indulges in business like structured cabling, smart switches, network security, surveillance, smart home services, and many more.

“The company has a pan-India distribution network and with the government pushing for Digital India; this company is likely to benefit more from the upcoming Union Budget,” Rajesh Bhosale, Technical Analyst, Angel One Ltd, said.

“Now if we consider the price action of the stock; we can observe a copybook ‘Rounding Bottom’ bullish breakout on the monthly chart. The volume is in sync with the price pattern, where we are witnessing U-shaped price and volume formation,” he said.

Prices were earlier facing resistance around the 61.8% retracement of the major fall seen from the levels of 237 to 48 levels and by crossing above the key resistance prices have opened doors for retesting the previous high levels (237)

In the recent quarterly results, the company delivered a good set of numbers and has reduced its debt; now making it almost a debt-free company indicating a good financial condition of the company.

“Considering all the above scenarios, we recommend a buy in this counter at current levels and on dips to 167 for a target of Rs 237 and Rs 265. The stop loss can be placed at Rs 148,” added Bhosale.

(Disclaimer: The views/suggestions/advices expressed here in this article is solely by investment experts. Zee Business suggests its readers to consult with their investment advisers before making any financial decision.)