Penny stocks with dragonfly doji pattern and upside potential

The Indian stock market has been trying to regain all of the lost momentum and has scaled back after seeing a bottom at about 5% below the peak level attained last month.

Investors who bank on technical analysis or patterns in the price and volume movements of a stock typically use candlestick charts or use it along with other parameters to predict price movements of stocks in the future.

One such parameter is the ‘dragonfly doji’, a Japanese candlestick pattern which hints at the possibility of a trend reversal. On the candlestick chart it has a ‘T’ shape due to a trading day that starts with a decline and then a reversal to close right near the opening price.

If we twine it with a bearish trend like the market has behaved in the recent past it could suggest some stocks that could see an uptick.

If we apply this to all the stocks, we get a set of 123 companies. Of these there are no large caps and just one mid-cap: Kajaria Ceramics. Rest all are small and microcap firms with many being penny stocks.

Filtering them further for penny stocks that are priced less than Rs 25 a share we have 53 companies.

These include names like MPS Infotecnics, Future Lifestyle, Ballarpur Industries, Shrenik, Jyoti, Goenka Diamond, Paras Petrofils, B C Power Controls, Dhanashree Elect, Mercator, LCC Infotech, Hindustan Flurocarbon, Prima Industries, National Steel, Shekhawati Poly Yarn, Gayatri Highways, Ironwood Education, Radha Madhav Corp, RR Financial and GTN Textiles.

Others in the pack include Taaza International, Yuvraaj Hygiene, Kachchh Minerals, Aishwarya Tech, Rishabh Digha, Kretto Syscon, SC Agrotech, Ramgopal Polytex, Constronics Infra, Creative Eye, Chothani Foods and Paos Industries, among others.