BEML, RCF: Divestment may trigger a breakout in PSU stocks, charts show

If the Nifty PSE Index sustains above 2,800 levels on the closing basis, it may see a rally towards 3,100 levels

Shares of public sector undertakings (PSUs) garnered traction on Monday after the government invited bids for strategic divestment in BEML, a defense and engineering company. Nifty PSE Index advanced as much as 1.5 per cent on the National Stock Exchange (NSE) in the intra-day day. At 11:45 am, the index was up 1 per cent, as against a 0.23 per cent gain in the benchmark Nfty50 index. 

On Sunday, DIPAM said the government will sell 26 per cent out of the total 54.03 per cent stake it holds in the company along with transfer of management control. In effect, the shares rallied 8 per cent to Rs 1,050 on the BSE, and were trading close to at their 52-week high level of Rs 1,080 on January 16, 2020. 

That apart, shares of RCF also jumped 3.2 per cent to hit a high of Rs 55.75 on the BSE after the Centre said it plans to sell 10 per cent stake in the chemicals and fertilisers company through offer for sale (OFS). 

Furthermore, investors also lapped up shares of PSU firms ahead of the presentation of the Union Budget for fiscal year 2021-22.

In this backdrop, is it the right time to invest in PSU stocks?

NIFTY PSE: With a "Golden Cross" pattern on the daily chart, the index is attempting to breakout above 2,935 levels. This resistance also correlates with its 100-weekly moving average (WMA) placed at 2,933 levels. The recent gap up in the range of 2,755-2,742 has become the support range for the immediate upside. Till the index sustains above 2,800 levels on the closing basis, the upside bias is set to breakout above the resistance. If that occurs, the rally may lead to 3,100 levels. CLICK HERE FOR THE CHART
 
BEML Ltd (BEML): The stock has decisively managed to cross 200-WMA at Rs 975. The stock now needs to surpass the resistance level of Rs 1,060 to see fresh rally in the direction of Rs 1,220 and Rs 1,250 levels. The closing basis support comes at Rs 950 levels. Overall, the trend looks promising as the Moving Average Convergence Divergence (MACD) has crossed the zero line upward with a positive crossover. Further, the sustainability above Rs 1,250 may take the stock towards Rs 1,400 levels. CLICK HERE FOR THE CHART

MMTC Limited (MMTC): The counter has broken above Rs 25 levels and is heading towards Rs 35 and Rs 44. Currently, the stock is struggling at 200-WMA placed at Rs 29 levels. A sustained move above the same may see strong buying momentum. The overall trend is positive with the formation of an "Inverse Head and Shoulder" as per the weekly chart. The support comes at Rs 26 levels. CLICK HERE FOR THE CHART

Rashtriya Chemicals & Fertilizers Ltd (RCF): Stock of the chemical and fertiliser stock has a horizontal resistance of Rs 56, as per the daily chart. Once this resistance gets crossed, the upside bias may see a rally towards Rs 60 and Rs 64 levels. The 200-WMA is placed at Rs 60 levels, which is also its near-term resistance. That said, the medium-term trend in the stock appears bullish as long as the support of Rs 48 is held on the closing basis. CLICK HERE FOR THE CHART