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Yesterday, the week started on a positive note for Indian share markets. The Nifty 50 index hit a high of 18,255, a couple of percentage points away from its all-time high of 18,604.

While the broader market index Nifty500 is merely 3% away from its all-time high, the smallcap index is yet to catch up with the momentum.

US markets are showing signs of reversal but are yet to confirm the bottom.

What highlighted me to write this piece and record video around the same for our subscribers was the US smallcap index - Russell2000.

 

Russell 2000 Weekly Chart

The high of 1,740 in 2018 acted as the resistance zone in 2020 ahead of the pandemic fall. The index corrected over 40% during the pandemic phase and witnessed the V-shape recovery in sync with the large-cap indices.

Currently, the index is back around the 1,700-1,800 zone to retest the long-term technical breakout levels.

The resistance turns support, and the probable double bottom pattern is visible on charts indicating the bottom process in on cards. Though the confirmation of the double pattern will be above 2,050.

As Indian markets are outperforming the US markets, the Nifty SmallCap index has just broken out of its consolidation zone.

 

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Nifty SmallCap Index Daily Chart

Something is on cards for SmallCap index as it breaks out of the falling trendline on the daily chart indicating the bulls are warming up for the bigger rally.

The horizontal trendline which acted as resistance in the first half of 2022 is acting as a support zone for bulls in the second half.

And the golden crossover is on cards too as the 50DEMA (green) and 200DEMA (orange) converge to turn bullish.

With the Nifty SmallCap index suggesting the bullish scenario on charts and Russell2000 in the bottoming process, I believe it’s time to focus on smallcap stocks.

Here is the list of potential smallcap stocks under 100 which investors should have on their watchlist.

Please note, these are not recommendations by any stretch. Just a list of stocks that look good on charts.

#1 IDFC Ltd

IDFC, incorporated in 1997, is a non-banking finance company (NBFC) regulated by the Reserve Bank of India.

The company currently trades at 81. It touched a new 52-week high today.

 

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Monthly Chart

 

#2 Shree Renuka Sugar Ltd

Next is Shree Renuka Sugars, an agribusiness and bioenergy company which is present across the sugar value-chain. It produces sugar, ethanol, power etc.

The company currently trades at 59 and has a 52-week high of 69.

Monthly Chart

 

#3 CESC Ltd

Third, we have CESC, the flagship company of the RP-Sanjiv Goenka Group, engaged in electricity distribution with embedded generation facility.

The company currently trades at 76 and has a 52-week high of 95.

 

Weekly Chart

 

#4 Bank of Maharashtra

Bank of Maharashtra is fourth on the list.

Shares of the company have seen a steep rise in recent days after the bank’s net profit more than doubled to 5.4 bn in the September 2022 quarter.

The bank is expecting growth momentum to continue for another couple of quarters with reducing NPAs and likely reducing future provisions.

The company currently trades at its 52-week high level of 23. 

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Monthly Chart

 

#5 NLC India Ltd

Last on the list is NLC India. The company is engaged in the business of mining of lignite and generation of power by using lignite as well as renewable energy sources.

Shares of the company currently trade at 80, around 15% away from their 52-week high level of 92.

 

 

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Monthly Chart

 

So there you go…a list of potential smallcap multibagger stocks for 2023 to keep on your watchlist.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. 


This article is syndicated from Equitymaster.com

 

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