NIIT, Sagar Cements, IIFL Securities among small-cap buy candidates on the charts

The Indian stock market breached the previous high to hit a new peak last month before seeing a correction, but is now trying to slowly creep up again.

Investors looking at charts and price and volume patterns have various parameters to decide whether a stock is ripe for the pick or is showing signals of weakness and is best left untouched.

We picked a metric called Williams %R, which is a momentum indicator that can signal bullish or bearish trends for a stock.

Developed by Larry Williams, Williams %R is the inverse of the Fast Stochastic Oscillator. Its reading varies between 0 and -100, with 0 to -20 indicating an overbought range and -80 to -100 being seen as an oversold zone.

We ran an exercise to see which small-cap stocks are in the bullish zone as per Williams %R. In particular, we looked at stocks with market cap of under Rs 5,000 crore, with the William %R just crossing over -80 mark from the previous score at that level. We spotted over 163 such stocks which could be set for a trend reversal.

Filtering them from the top end of their market cap, we get names like NIIT, Sansera Engineering, TCNS Clothing, Sagar Cements, Astra Microwave, Puravankara, IIFL Securities, HIL, SEPC, Krsnaa Diagnostics, Sasken Technologies, Matrimony.com, Sanmit Infra, Manorama Industries, Steel Exchange India, Centrum Capital.

Lower down the order there are companies like Anjani Portland, Binny, Automobile Corp, Empyrean Cashews, Diamines & Chemicals, Star Housing Finance, Vaarad Ventures, Mangalam Industrial, Xtglobal Infotech, Dynemic Products, Benares Hotels, Shri Dinesh Mills, Dudigital Global, HCP Plastene, U P Hotels, Vital Chemtech, Shree Ganesh Remedies and United Polyfab.

In the penny stock pack with stock price of under Rs 20 there are companies like Ruchi Infrastructure, Pil Italica Lifestyle, Setco Automotive, Kritika Wires, Smiths & Founders, Innovassynth Invest, Dharani Sugars and Tirupati Sarjan.