Here are 5 smallcap stocks breaking out on charts now

The Indian stock market is experiencing a remarkable upswing, with the Nifty50 index approaching its all-time high of 25,078. This milestone reflects a robust bullish sentiment across the market.

The Nifty Smallcap 250 index has already surpassed its previous peak, setting a new all-time high of 18,150. This achievement suggests that investor's risk meter is shifting towards greed in the market.

Global equities that continue to ascend are providing additional momentum to Indian indices. Against this backdrop, we have identified five breakout stocks from the Nifty Smallcap 250 that have emerged from their consolidation zones, presenting compelling opportunities for readers to track.

Before discussing the stocks, a chart check of the Nifty Smallcap 250 index.

The Nifty Smallcap 250 index has formed an ascending triangle pattern since early July 2024, with higher lows and a consistent resistance level. This pattern typically indicates a bullish continuation in technical analysis, suggesting that the upward trend is likely to persist. The index recently broke out of this ascending triangle, marked by a runaway gap—a strong bullish signal that signifies a rapid price increase.

The formation resembles a pennant breakout when examining the June 2024 rally in conjunction with the ascending triangle pattern. Although this may not fit the textbook definition of a pennant pattern, which typically involves a symmetrical triangle, the overall chart signals a continuation of the bullish trend following a period of consolidation. Pennants are continuation patterns in technical analysis, characterized by a brief period of consolidation that precedes a breakout.

Breakout Stocks to Watch from the Nifty Smallcap 250

Let's check the charts of the five breakout stocks from the Nifty Smallcap 250, which have emerged from their consolidation zones and are demonstrating strong bullish momentum.

Please note that these are NOT recommendations. But just a study to share a list of stocks that are at critical points in a technical chart.

⦁ Affle India

Affle India's stock has made a significant move on its weekly chart by breaking out of a three-year consolidation zone around the ₹1,515 mark. The stock has convincingly surpassed its previous high of ₹1,511, turning this resistance into a new support level at ₹1,500.

The rally that began in March 2024 has been robust, breaking through key resistance levels at ₹1,400 and ₹1,511. The bullish breakout from the consolidation zone indicates a potentially strong upward momentum, making Affle India a noteworthy stock for readers to track.

⦁ Bombay Burmah Trading Corp (BBTC)

BBTC's stock price experienced a consolidation phase between ₹1,300 and ₹1,800 in the first half of 2024. However, the stock entered the year's second half with a remarkable rally, reaching ₹2,400 in July 2024.

The recent breakout above ₹2,400 suggests a resumption of the bullish trend, as the bulls take a breather before pushing the stock higher. This breakout positions BBTC as one of the top five breakout stocks in our list.

⦁ Jindal Saw

Jindal Saw exemplifies the adage, "The trend is your friend," which is often cited in technical analysis.

According to Dow Theory, the stock follows a higher high—higher low pattern, a classic bullish trend on the daily chart. The breakout at ₹600 confirmed the rally, and a subsequent retest allowed bulls to enter the market, reinforcing the bullish momentum. The recent breakout at ₹670 suggests the stock could continue its northward trajectory.

• Quess Corp

Quess Corp stands out as an underperformer in a market dominated by stocks reaching all-time highs. However, what makes Quess Corp intriguing is its breakout from a long-term trendline resistance dating back to its all-time high of ₹1,244 in 2018.

This 70-month breakout is significant, as it marks the completion of a major cycle and entering into a new phase. The breakout in July 2024, followed by bullish follow-through in August, suggests that Quess Corp is entering a new phase. The breakout was accompanied by higher volumes, further affirming the move's strength. It will be interesting to track how the stock does from here on.

⦁ Welspun Corp Ltd. (Welcorp)

Welspun Corp Ltd., a prominent player in the Nifty Metals index, has been an outperformer, trading at an all-time high. This metal stock is also in sync with the Nifty Smallcap 250 index, reflecting broader market trends.

The stock consolidated between February 2024 and July 2024, finally breaking out at ₹625. A retest followed the breakout, and the upward momentum indicates robust bullish strength. The higher trading volumes also suggest strong participation, further validating the breakout.

The five stocks highlighted above—Affle India, BBTC, Jindal Saw, Quess Corp, and Welspun Corp Ltd.—have all demonstrated strong breakout patterns, indicating a resumption of potential bullish momentum. Readers should consider tracking these stocks, keeping in mind the overall market dynamics and the technical signals provided by the charts, as these are not the recommendations.

Note: The purpose of this article is only to share interesting charts, data points and thought-provoking opinions. It is NOT a recommendation. If you wish to consider an investment, you are strongly advised to consult your advisor. This article is strictly for educative purposes only.

Brijesh Bhatia has over 18 years of experience in India's financial markets as a trader and technical analyst. He has worked with the likes of UTI, Asit C Mehta, and Edelweiss Securities. Presently he is an analyst at Definedge.

Disclosure: The writer or his dependents may or may not hold the stocks/commodities/cryptos/any other asset discussed here as per SEBI guidelines.

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