Salona Cotspin Ltd: This Rising Star From The Textile Sector Is Showing Strong Bullish Momentum

At the beginning of the week, the Nifty index experienced a volatile session, witnessing initial selling pressure followed by a recovery in the second half of the day. Eventually, it managed to close in the green, surpassing the opening levels. Amidst this volatility, textile stocks such as Vardhman Textiles and Sutlej Textile demonstrated strength, closing near the day’s high with gains of over 2.5%. However, one standout stock from the sector outperformed both its peers and the market, surging by approximately 14% within the first hour of the trading session.

This exceptional stock is Salona Cotspin Ltd, a prominent player in the textile industry. The company specializes in various products, including ring spin, compact, open-end, slub, hank yarns, and fleece 2/3 thread. It also offers a wide range of fabrics, such as French terry, full and mini jacquard, interlock or double knit, and single jersey. Founded on January 18, 1994, Salona Cotspin Ltd. is headquartered in Coimbatore, India.

From a technical perspective, the weekly chart reveals that after an impressive surge of over 900% from the March 2020 lows, the stock is currently consolidating within a broad range. The upper side of the range stands around Rs 350, while the lower side rests at Rs 193.35 since midweek of January 2022.

Interestingly, the lower boundary of the consolidation range perfectly aligns with the 50% retracement support level of the previous multibagger rally on the weekly chart. Drawing a line from the high of midweek January 2022 (Rs 350) to the first week of November 2022 (Rs 323.25) enables us to identify the breakout trendline of the “Bullish Up-Flag” continuation price pattern.

Notably, the stock is currently trading just below this trendline level, and the breakout will be confirmed once it closes above it. The rally witnessed today is supported by robust volumes, surpassing the average volumes of the past 70 weeks. Based on this pattern, the minimum target for the stock is approximately Rs 405, indicating a potential increase of over 30% from the breakout level of Rs 310.

Considering all these factors, the chart analysis confirms strong bullishness, presenting an enticing buying opportunity. Keep an eye on this stock in the upcoming sessions.