By Allcargo Logistics saw its share price skyrocket by nearly 12% during early trading on the BSE on Tuesday, August 20, following the release of a positive monthly operational update. The stock opened at ₹62, slightly above its previous close of ₹61.52, and quickly surged to ₹68.65, reflecting an 11.6% jump.
However, as the trading session progressed, the stock cooled off slightly. By 10:15 am, it was trading at ₹66.83, still up by 8.63%. Meanwhile, the BSE Sensex was up by 0.60%, trading at 80,910.
The surge in Allcargo Logistics’ stock price is a direct response to the company’s healthy operational performance, which was reported after market hours on August 19. According to the company, its LCL (less than container load) volume for July 2024 stood at 8,18,000 cubic meters, marking a 6% increase month-on-month and a 5% increase year-on-year. This volume is notable as it matches the company’s highest-ever monthly volume, which was recorded in August 2022.
Allcargo Logistics attributed the steady increase in LCL volumes to improved global trade conditions and its strategic growth initiatives. The company expressed confidence that this momentum would continue throughout the year, bolstered by strong performance across all major regions. Specifically, increases in LCL volume were noted in the US, Latin America, Europe, Asia Pacific, and the Middle East.
While LCL volumes showed strong growth, the company’s FCL (full container load) volumes remained flat compared to June. However, on a year-on-year basis, FCL volumes grew by 7%. The company reported that while there were marginal declines in FCL volumes in China, Vietnam, and Mexico, there were increases in India, Turkey, and the UAE.
Despite the recent surge, Allcargo Logistics’ share price has been under pressure over the past year. The stock hit its 52-week low of ₹58.63 on August 14, reflecting a challenging period for the company. Up until the close on August 19, the stock had fallen more than 7% over the last year. In contrast, it reached its 52-week high of ₹97.70 on January 2, highlighting the volatility the stock has experienced.
The recent rally in Allcargo Logistics’ share price has caught the attention of technical analysts, who see potential for further gains. Jigar S. Patel, Senior Manager of Equity Research at Anand Rathi Share and Stock Brokers, pointed out that the stock recently formed a bullish Bat pattern, a harmonic chart pattern that is often indicative of a potential reversal.
According to Patel, this pattern emerged after the stock formed a triple bottom structure near its low of ₹61, a key support level that the stock tested multiple times without breaking below.
The triple bottom pattern is typically seen as a strong indicator of price support, suggesting that the downward momentum in the stock may be weakening. Patel also noted a bullish divergence just before the stock reversed from the ₹61 level.
In this instance, while the stock price made a lower low, the momentum indicator, such as the RSI or MACD, showed a higher low. This divergence is a classic signal that the downtrend may be losing steam, paving the way for a potential upward reversal.
Based on these technical indicators, Patel recommended buying the stock on dips until it reaches the ₹63 level, with an upside target of ₹78. To manage risk, Patel advised setting a stop loss at ₹59, based on a daily closing price, which would help limit potential losses if the stock were to break below this critical support level.
The positive operational update and favorable technical indicators have given investors a renewed sense of optimism about Allcargo Logistics’ prospects. As the company continues to navigate the complexities of the global logistics market, the recent surge in its stock price may signal a turning point after a challenging year.
Investors will be closely watching the company’s performance in the coming months, particularly as it seeks to maintain the momentum in its LCL volumes and capitalize on growth opportunities in key regions.
