TVS Supply Chain: BO attempt after 6 Month Consolidation.

This Supply Chain Giant is attempting to break out. After 6 Months of Consolidation - Is it Time to Load Up? Let's analyse today's Idea.

Price Action Analysis:

Current Market Structure:
• Stock is currently trading at ₹143.33, showing a strong +6.83% gain
• Price has broken above a key resistance zone around the ₹140 level
• Clear uptrend formation with a higher highs and higher lows pattern emerging
• Recent breakout attempt from a prolonged consolidation phase

Historical Price Movement:
• Stock witnessed a sharp decline from highs of ₹217+ in late 2024 to lows around ₹107
• Extended consolidation phase from February to May 2025 between ₹110-145 levels
• Current breakout attempt suggests potential trend reversal from bearish to bullish

Volume Spread Analysis:

Volume Characteristics:
• Significant volume spike visible during the recent breakout session
• Volume of 3.33M is substantially higher than the 20-day average of 972.88K
• Volume confirmation supporting the price breakout attempt above resistance
• Previous volume spikes coincided with major price movements

Volume Price Relationship:
• Healthy volume-price relationship during the current upward move
• Relatively lower volumes accompanied earlier decline phases
• Current breakout attempt volume suggests institutional participation

Key Technical Levels:

Support Levels:
• Primary Support: ₹130-132 (previous resistance turned support)
• Secondary Support: ₹120-125 (consolidation zone low)
• Major Support: ₹110-115 (multi-month consolidation bottom)

Resistance Levels:
• Immediate Resistance: ₹150-155 (psychological level)
• Medium-term Resistance: ₹165-170 (previous swing high)
• Major Resistance: ₹185-190 (Fibonacci retracement level)

Base Formation:
• Rectangle consolidation pattern formed between ₹110-145 levels
• Base duration: Approximately 4-5 months (February to May 2025)
• Breakout from this base suggests potential for sustained upward movement

Technical Patterns:

Primary Patterns:
• Rectangle/Box pattern completion with upward breakout attempt
• Potential inverse head and shoulders pattern on a longer timeframe
• Ascending triangle formation in recent weeks before the breakout

Trend Analysis:
• Short-term trend: Bullish (breakout confirmed)
• Medium-term trend: Transitioning from bearish to bullish
• Long-term trend: Still in recovery phase from major decline

Trade Setup and Strategy:

Entry Strategy:
• Aggressive Entry: ₹143-145 (current levels on any minor pullback)
• Conservative Entry: ₹135-138 (on retest of breakout level)
• Volume confirmation is required for any entry

Position Sizing:
• Risk 1-2% of portfolio capital on this trade
• Position size calculation: Portfolio Value × Risk % ÷ Stop Loss Distance
• Example: For ₹1,00,000 portfolio with 2% risk = ₹2,000 risk capital

Risk-Reward Calculation:
• Risk-Reward Ratio: Minimum 1:2 preferred
• Expected risk per share: ₹15-20 based on stop loss placement
• Potential reward: ₹30-40 per share to the first target

Exit Strategy:

Profit Targets:
• Target 1: ₹165-170 (15-20% upside) - Book 40% position
• Target 2: ₹185-190 (30-35% upside) - Book 40% position
• Target 3: ₹200+ (40 %+ upside) - Trail remaining 20% position

Stop Loss Levels:
• Initial Stop Loss: ₹125-128 (below consolidation support)
• Trailing Stop: Move to breakeven once Target 1 is achieved
• Final Trail: Use 10-day EMA or ₹10-15 trailing stop

Risk Management Framework:

Risk Control Measures:
• Maximum loss per trade: 2% of total capital
• Position sizing based on stop loss distance
• No averaging down if the trade goes against the initial thesis
• Exit if the technical structure breaks down

Portfolio Allocation:
• Maximum exposure to single stock: 5-8% of portfolio
• Sector allocation limit: 15-20% to logistics/supply chain
• Maintain diversification across market caps and sectors

Sectoral Analysis:

Logistics and Supply Chain Sector:
• The sector has shown resilience post-pandemic disruptions
• Growing e-commerce and digitalization are driving demand
• Government infrastructure push benefiting logistics companies
• Increasing focus on supply chain optimization across industries

Sector Positioning:
• TVSSCS is positioned in the growing third-party logistics market
• Beneficiary of Make in India and manufacturing growth
• Automotive sector recovery supporting the company's core business

Fundamental Backdrop:

Business Overview:
• Leading third-party logistics and supply chain solutions provider
• Strong presence in automotive, consumer goods, and industrial sectors
• Integrated service offerings including warehousing, transportation, and value-added services

Growth Drivers:
• Expansion in new geographies and service offerings
• Technology-driven efficiency improvements
• Growing outsourcing trend in supply chain management
• Recovery in the automotive sector supporting traditional business

Market Outlook and Catalysts:

Positive Catalysts:
• New client acquisitions and contract wins
• Capacity expansion announcements
• Favourable government policies for the logistics sector

Risk Factors:
• Economic slowdown affecting industrial demand
• Fuel price volatility is impacting transportation costs
• Competitive pricing pressure in the logistics industry
• Global supply chain disruptions

My Take:

TVS Supply Chain Solutions presents a compelling technical setup with the recent breakout attempt from a multi-month consolidation. The combination of strong volume confirmation, supportive sectoral trends, and improving fundamental backdrop makes this an attractive opportunity for Short to medium-term investors. However, proper risk management and position sizing remain crucial for the successful execution of this trade setup.

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Disclaimer: "I am not a SEBI REGISTERED RESEARCH ANALYST AND INVESTMENT ADVISER."
This analysis is intended solely for informational and educational purposes and should not be interpreted as financial advice. It is advisable to consult a qualified financial advisor or conduct thorough research before making investment decisions.