Olectra Greentech shares jumped 13% in 3 sessions; is this a trend reversal sign?

Shares of Olectra Greentech Ltd continued their upward move for the third consecutive session on Wednesday. The stock settled 4.67 per cent higher at Rs 1,233.90. At this closing price, it has gained 13.13 per cent in just three trading days.

The scrip witnessed heavy trading volume along with its price action as around 1.71 lakh shares changed hands on BSE. The figure was higher than the two-week average volume of 56,000 shares. Turnover on the counter came at Rs 21.30 crore, commanding a market capitalisation (m-cap) of Rs 10,127.94 crore.

A market expert suggested that Olectra's stock is suitable for high risk-taking investors but existing ones should hold on to it.

Kranthi Bathini, Director of Equity Strategy at WealthMills Securities, said, "Olectra was in a consolidation phase after hitting its all-time high levels. Currently, it is picking up pace amid a focus on public transport in the electric vehicle (EV) space. Olectra has been facing stiff competition from other players in the EV segment. So, investors with a high-risk appetite should only look into the stock. That said, those holding can continue with their positions. Going forward, earnings for the next couple of quarters will be crucial."

On technical setup, a decisive breach above Rs 1,300 is required for further upside potential in Olectra shares. An analyst said the counter is displaying preliminary indications of a potential trend reversal.

Ravi Singh, SVP - Retail Research at Religare Broking, said, "The stock looked strong on charts and it can hit an upside target of Rs 1,350 in the near term. Keep stop loss placed at Rs 1,230 for this trade."

Osho Krishan, Senior Analyst – Technical & Derivative Research at Angel One, said, "The stock is beginning to display preliminary indications of a potential reversal, and a definitive move beyond Rs 1,300 level could serve as a catalyst for further upward momentum. Conversely, the price range of Rs 1,160-1,130 is anticipated to provide support in the event of any downward movements in the near term."

The scrip traded higher than the 5-day, 10-, 20-, 30-day and 50-day simple moving averages (SMAs) but lower than the 100-day, 150-day and 200-day SMAs. The stock's 14-day relative strength index (RSI) came at 58.80. A level below 30 is defined as oversold while a value above 70 is considered overbought.

The stock has a price-to-equity (P/E) ratio of 79.81 against a price-to-book (P/B) value of 10.28. Earnings per share (EPS) stood at 15.46 with a return on equity (RoE) of 12.89. According to Trendlyne data, Olectra has a one-year beta of 1.4, indicating high volatility.

Olectra is a subsidiary of Megha Engineering and Infrastructures Ltd (MEIL), which manufactures electric buses in India. It is also the country's largest manufacturer of silicone rubber/composite insulators for power transmission and distribution networks.