Today, the Benchmark index rallied to the highest level since 19 August 2022, all thanks to the positive global market sentiments. With all 11 sectoral indices trading in the green zone, this last day of the week is surely a good day for investors.
In the midst of outperformers, some investors might not be comfortable keeping high-flying stocks on the radar that are already trading near their highs. Conservative investors might want to look for opportunities in the beaten-down counters, to cap their downside risk. One such stock that completely fulfills this parameter is Nazara Technologies (NS:). The company has a market capitalization of INR 4,357 crores and is in the business of diversified gaming and sports media platform.
Very recently, the company acquired WildWorks which has the no.1 grossing app in gamified learning for 8-12-year-olds in the US, and clocked a revenue of US$13.8 million in CY21. WildWorks would enable Nazara to solidify its leadership position in the gamified learning space for kids. Wildworks has also successfully partnered with Ryan’s World, which is the no.1 grossing YouTube channel in the world (in its category), and would further open up similar partnership opportunities with emerging kid influencers to create new revenue streams.
Image Description: Daily chart of Nazara Technologies with volume bars at the bottom
Image Source: Investing.com
The daily chart structure of Nazara Technologies is looking quite promising. The stock tanked in a one-way fall from the 52-week high of INR 1,678 to a 52-week low of INR 475.05. This massive value erosion finally seems to be abating now. The stock has stopped its further fall over the last many weeks and is only moving gradually towards the upside, looking to pare some of the losses.
More interestingly, before reversing the trend, the stock formed a bullish divergence at the 52-week lows which is a very positive sign for a trend reversal. The divergence indicates that the current momentum is minimizing and could potentially transition to an opposite one. Any reversal signal when coupled with the divergence significantly increases the chances of a potential reversal, as what is currently being witnessed with the stock.
Today, Nazara Technologies shares are up 8.19% to INR 717 and almost reached the resistance level of INR 720 – INR 725. Once this level is cleared, the stock could move to the next level of INR 800 fairly quickly. What’s further increasing the confidence in this uptrend is the volume expansion. A total of 2.66 million shares have exchanged hands so far (as of 11:33 AM IST) which is already the highest one-day volume in over a month. On the downside, a fall below INR 640 would probably negate the current rally.
