Allcargo Logistics share price surges 12% post July business update; can it rise more?

Allcargo Logistics share price witnessed a sharp jump of about 12 per cent in morning trade on BSE on Tuesday, August 20, buoyed by its healthy monthly operational update.

Shares of Allcargo Logistics opened at ₹62 against its previous close of ₹61.52 and soon vaulted 11.6 per cent to touch the level of ₹68.65. The stock, however, cooled off later. Around 10:15 am, it traded 8.63 per cent higher at ₹66.83 apiece. The BSE Sensex was 0.60 per cent up at 80,910 at that time.

After market hours on August 19, the company said its LCL (less than container load) volume for July 2024 stood at 8,18,000 cubic meters, witnessing a 6 per cent month-on-month increase and a 5 per cent year-on-year increase. The volume was similar to its highest-ever monthly volume recorded in August 2022.

Allcargo Logistics said LCL volumes steadily increased due to improved global trade and the company's growth initiatives. The company expects the momentum to remain through the year.

According to the company, an increase in volume was witnessed in all major regions, such as the US, Latin America, Europe, Asia Pacific, and the Middle East.

On the other hand, the company's FCL (full container load) volume growth for last month remained similar to June but saw a 7 per cent year-on-year growth.

"FCL volumes have been flat overall with marginal declines in China, Vietnam, and Mexico, as well as an increase in India, Turkey, and UAE," the company said.

Allcargo Logistics share price has been under pressure over the last year. The stock hit its 52-week low of ₹58.63 last Wednesday (August 14). Till August 19 close, the stock has fallen over 7 per cent in the last one year.

Allcargo Logistics shares hit their 52-week high of ₹97.70 on January 2.

Jigar S. Patel, Senior Manager of Equity Research at Anand Rathi Share and Stock Brokers, observed that recently, Allcargo Logistics formed a bullish Bat pattern, which is a harmonic chart pattern known for indicating potential reversals.

Experts see more upside potential

Some technical experts expect the stock to rise further from the current levels due to favourable technical indicators.

Jigar S. Patel, Senior Manager of Equity Research at Anand Rathi Share and Stock Brokers, observed that recently, Allcargo Logistics formed a bullish Bat pattern, which is a harmonic chart pattern known for indicating potential reversals.

According to Patel, this pattern emerged after the stock created a triple bottom structure near its low of ₹61, which is a vital sign of price support. The triple bottom pattern typically signifies that the stock has tested a key support level multiple times, failing to break below it, which suggests that the downward momentum is weakening.

Additionally, Patel underscored that a bullish divergence was observed just before the stock reversed from the ₹61 level, where the price made a lower low, but the momentum indicator (such as the RSI or MACD) showed a higher low. This divergence is a classic signal that the downtrend might be losing steam, hinting at a potential upward reversal.

"Based on these technical indicators, it was advised to buy the stock on dips until it reaches the ₹63 level, with an upside target of ₹78. To manage risk, a stop loss is suggested at ₹59, based on a daily closing price, which would limit potential losses if the stock breaks below this key support level," said Patel.

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