Shares of Snowman Logistics, the company that will deliver COVID-19 vaccines for Dr Reddy’s Laboratories, have almost doubled since June 2020 and have gained about 6 per cent in May.
However, the stock has fallen by about 14 per cent so far in 2021. It’s also declined about 22 per cent from its 52-week high of Rs 71.25 recorded on December 30, 2020.
Still, the company with a market capitalisation of more than Rs 900 crore is on track to hit a fresh 52-week high and go past Rs 80 in 3-6 months, an upside of over 40 per cent from the June 4 closing price of Rs 56.05 on the BSE.
Snowman Logistics is a leading integrated temperature-controlled logistics service provider with a pan-India presence. The stock has been on the traders’ radar with rising volumes after the company announced a partnership with Dr Reddy’s Laboratories last week for delivery of the Sputnik COVID-19 vaccine across the country.
Snowman will manage the delivery through five of its high-capacity temperature-controlled warehouses in Mumbai, the National Capital Region, Kolkata, Chennai and Bengaluru, the company said.
The stock listed on the exchange at about Rs 75 in September 2014 and rallied to a lifetime high of Rs 134 in November that year. Since then, it underwent a relentless fall and dropped to a low of about Rs 25 in May 2020 before bouncing back to Rs 70 odd levels.
“During the process, the stock has confirmed a higher top and higher bottom formation on the larger time frame, which indicates that the overall correction is over in the stock,” technical experts suggested.
“The stock is trading back to 55 marks in June 2021, and if we look at the given weekly chart it can be seen that the very recent fall from the high of 71 got halted exactly at the 61.8% Fibonacci retracement of the entire rally from 25 to 71. This level was near to the 42 mark,” Mehul Kothari, AVP – Technical Research at Anand Rathi Shares and Stock Brokers, told Moneycontrol. “On the daily chart, we are witnessing a ‘double bottom’ formation near 42 level. This 42 level is also the placement of 200-week exponential moving average. Also, previously this has been a strong demand zone for the stock, as evident from the given chart.”
A double-bottom formation in a charting pattern describes a potential change in the trend. It is formed when an underlying stock or index drops, rebounds, drops again to about the same level from where it rallied, and then rebounds again. The pattern resembles the letter ‘W’.
“A dip towards Rs 42 can be used to enter the stock, and at the current level, there is a range breakout above 57 on the daily chart. Further, the daily RSI is on the verge of giving a range breakout above 65, and that phenomenon is known as a range shift,” Kothari explained.
Such range shifts result in a faster momentum on the upside.
“Thus, at this zone, the stock is a decent candidate to go long for an upside target of 81 with a stop loss of 42. The time frame for the same could be between 3 and 6 months,” Kothari added.Disclaimer
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