While the Indian markets opened on a flat note but soon dived lower on account of weak global cues, one stock is making a huge noise on the street. The company is Panacea Biotec Ltd (NS:) which is a small-cap biotechnology company with a market capitalization of INR 820 crores.
The stock soared to hit a 20% upper circuit in the opening session as investors are looking to make any bid to get their hands on the company’s shares. The reason behind the enthusiasm for Panacea Biotech shares is that the company bagged a long-term supply order worth US$127.3 million (INR 1,040 crores) from UNICEF and Pan American Health Organization (PAHO) for the supply of its WHO pre-qualified fully liquid Pentavalent vaccine, Easyfive- TT® (DTwP-HepB-Hib)
Image Description: Daily chart of Panacea Biotech with volume bars at the bottom
Image Source: Investing.com
As of 9:43 AM IST, the stock has retraced a bit from the day’s high of INR 160.8 and currently holding a 16.2% gain to INR 155.65. As the stock hit an upper circuit, the volumes for the day so far are obviously expected to be higher than the average. A total of 549.9K shares have exchanged hands in the first few minutes of trading which is 1,808% higher than the 10-day average volume of 28.81K shares.
In the midst of this rally, the stock also broke above the resistance of INR 145 of a range that had been going on since mid-June 2022. Today’s breakout with a volume expansion is a no-brainer for momentum traders who which to capitalize on this range breakout. As there is a huge gap being left on the charts, the stock might retrace back to fill the gap which is where conservative traders might think to participate in this rally.
The stock had taken a heavy beating in the last one year, losing almost 50% of its market capitalization from the 52-week high of INR 286, marked in October 2021. This beaten-down price is making this stock even a better prospect for a reversal from here.
Above the resistance, the stock might travel to the nearest swing high of INR 175 and then to around INR 190. On the downside, as long as the level of INR 125 is holding its ground, the downtrend seems to have been abated.
