Multibagger defence stock doubles investor wealth in six months, time to book profit?

Multibagger stock: Shares of Apollo Micro Systems surged after two days of fall amid a rally in the broader market on Tuesday. The multibagger stock gained 5.24% to Rs 290.20 in the current session against the previous close of Rs 276.40 on BSE. Market cap of the defence firm rose to Rs 9,217 crore.

With today's rally, the stock has gained 128.29% in six months. 

The stock has risen 172% in a year and risen 383% in two years, delivering multibagger returns during the period. The defence stock has zoomed 1631% in three years. 

However, analysts have mixed views on the outlook of the defence stock. 

KKunal V Parar, VP of Technical Research and Algo, Choice Broking said, "On the daily chart, the stock has formed a Bearish Harami candlestick pattern, which is a bearish reversal signal and indicates potential downside movement. Additionally, the stock is trading below its 50-hour moving average, suggesting further weakness in the counter. The breakdown of the lower band of the upward rising channel also supports a negative outlook. Moreover, the daily momentum indicator RSI has recently declined from the overbought zone, pointing towards renewed selling pressure.

Considering the above technical structure, we expect the stock to witness a downside move towards Rs 256–239 levels, with a strict stop loss placed at Rs 300."

Shitij Gandhi, Sr. Research Analyst (Technicals) SMC Global Securities says the stock has been on a strong run in recent weeks, but the latest move suggests it is taking a breather after the sharp gains.

"From a technical perspective, the bigger picture remains upbeat as the stock is still holding comfortably above its long-term moving averages. Short-term indicators, however, are flashing signs of fatigue, with the RSI hovering near overbought levels. This points to some consolidation in the near term before any fresh momentum builds.

For now, Rs 315 stands out as the key resistance level and a strong push above this zone could open the door for the next rally phase. On downside, Rs 250-245 support band is expected to act as a safety net for buyers on declines. Traders may see dips as buying opportunities, with a breakout above resistance likely to spark renewed interest," says Gandhi. 

Kunal Kamble, Sr. Technical Research Analyst at Bonanza Portfolio said, "With the RSI in the overbought zone, the price action is well-supported, signaling that the dip is more of profit booking rather than a trend reversal.  The broader trend remains positive, and the stock is expected to move towards Rs 360–400 levels in the coming sessions. Traders can consider a buy-on-dips strategy between ?247–237, keeping a stop loss at Rs 222.

Apollo Micro Systems shares have a one-year beta of 0.9, indicating low volatility during the period.

In terms of technicals, the relative strength index (RSI) of Apollo Micro Systems stands at 64.9, signaling it's trading neither in the overbought nor in the oversold zone.

Apollo Micro Systems stock is trading higher than the 5 day, 10 day, 20 day, 30 day, 50 day, 100 day, 150 day and 200 day moving averages.

Apollo Micro Systems is mainly into the supply of electronics and electromechanical systems and components including design, research & development of systems which are used in missile programmes (weapon systems electronics), underwater missile programmes (weapon systems electronics), avionic systems, ship borne systems, submarine systems, etc.