NCC Ltd shares surge 6.5%, marking a promising buying opportunity

NCC Ltd., a construction company, experienced a remarkable jump of over 6.5% in its stock with strong volumes exceeding 16 million, marking a technical breakout of a continuation price pattern. 

NCC Ltd. engages in construction and engineering services, operating in both Indian and international markets. The company specializes in various sectors, including buildings and housing, water and environment, irrigation, electrical work, roads, metals, power, railways, and mining. Founded by Alluri Venkata Satyanarayana Raju in 1978, NCC Ltd. is headquartered in Hyderabad, India.

One significant aspect is the company’s debt reduction, along with an impressive profit growth of 25.1% CAGR over the past five years. Additionally, NCC Ltd. has maintained a healthy dividend payout of 22.0%. Noteworthy improvements include a decrease in debtor days from 94.6 to 74.5 days and a reduction in working capital requirements from 132 days to 82.8 days. 

From a technical perspective, a careful analysis of the daily chart reveals a breakout from a consolidation phase. NCC Ltd. has been consolidating within a wide range by making higher highs and higher lows, with the upper boundary near Rs 129.85 and the lower boundary at Rs 99.65. Notably, the lower boundary aligns perfectly with the 38.2% retracement support level of the previous significant rally, as depicted on the daily chart from June 20, 2022. Drawing a trendline from the high on May 3, 2022 (Rs 126.90) to July 6, 2023 (Rs 130.50) identifies the breakout trendline level (Rs 131) of the continuation price pattern.

Today, NCC Ltd. successfully registered the breakout by closing above the crucial level of Rs 131, resulting in a substantial surge of approximately 6.5% in a single trading session. The breakout rally was accompanied by robust trading volumes, surpassing the average volumes of the past 30 days. Based on this pattern, the stock’s minimum target is estimated to be around Rs 151, indicating a potential increase of over 15% from the breakout level.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet, and is subject to changes. Please consult an expert before making related decisions.