By Brijesh Bhatia
The Union Budget has been unveiled and while the initial volatility in the market is settling down, a potential opportunity may arise from this period of uncertainty. When market fears dissipate, they often create avenues for investors to capitalize on potential growth.
As a savvy investor, one of the best ways to identify promising stocks is to track those that are showing consistent accumulation, evidenced by rising volumes and a corresponding upward price movement.
Also ReadTop 3 Expensive Stocks in India Based on P/E Ratio. Should You Sell?
The concept of “rising price with volumes” is a critical indicator for identifying stocks with bullish potential. Before we head to the stock, let us understand the theory.
The rising price with volume theory
In technical analysis, the relationship between price and volume is paramount. Rising price with increasing volume is typically seen as a confirmation that the current trend is likely to continue. In other words, when prices move higher alongside a substantial increase in trading volume, it suggests strong buying interest and institutional participation.
For this analysis, we focused on stocks that showed both a significant positive price moves and a spike in trading volume. Specifically, we identified stocks that had:
- A positive closing price of more than 20% in January
- Over a 100% increase in volume compared to their 20-month average trading volumes
By scanning for these criteria, we got three stocks that meet the conditions for a potential bullish trend based on the price-volume relationship.
Source: RZone, Definedge Securities
Let us dive deeper into these stocks and explore what the charts reveal.
1. Navin Fluorine International Limited (NAVINFLUOR)
Navin Fluorine International Limited is a leading manufacturer of specialty chemicals and fluorochemicals in India. The company’s robust growth and strong market positioning have made it a significant player in the chemicals industry.
Source: TradePoint, Definedge Securities
The stock price of Navin Fluorine rallied by 27.82% in January, accompanied by a remarkable 120% increase in trading volume compared to its 20-month average. The breakout was significant, as the stock price broke above a 14-month high, signalling a potential new phase of growth.
The breakout is accompanied by the highest monthly volume ever seen on the chart,
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