Bulls ride PSE index to historic peak, half of index stocks on breakouts

Altogether 10 out of 20 stocks in Nifty PSE index are flashing breakout structures that reflect medium-term bullishness.

Nifty PSE (Public Sector Enterprises) index hit a new-all time on Wednesday, conquering major barrier of 4,550-mark, with majority of its constituents flashing new breakouts on charts.  Altogether 10 out of 20 stocks are flashing breakout structures that reflect medium-term bullishness. 

Shares of GAIL (India), National Aluminium Co., NTPC, Oil India, Oil & Natural Gas Corporation, Power Finance Corporation, REC, Power Grid Corporation of India, Hindustan Aeronautics and Coal India are scaling higher highs, portraying “Bullish rising channel pattern”.

A Rising Channel pattern is a scenario where stock price continues to scale higher highs, with underlying support continues to bolster any weaknesses.  

On Wednesday, while Power Finance Corporation and REC have reached new 52-week highs, other bullish stocks like GAIL (India), NTPC and Hindustan Aeronautics are shy of few points from their respective 52-week peaks. 

The laggard stocks in the PSE index are Container Corporation of India, Hindustan Petroleum Corporation, Indian Railway Catering And Tourism Corporation and Life Insurance Corporation of India, as they all trade beneath the crucial 200-day moving average (DMA). Technically, betting on stocks under 200-DMA is highly dodged as broader sentiment endures a bearish outlook.

When an index scales anew imperative high, particularly in a situation where broader outlook remains dicey, the trend indicates a robust and resilient underlying momentum. Such breakouts may lead to a sharp upside in coming sessions. Nifty PSE index shows such formation and shall rally further towards 4,800 and 5,000 levels.

Stocks like Power Finance Corporation and REC are firmly rising upward, despite low volumes. Such patterns if manage to scale further on price strength; the trend may later see addition of volumes on continuous basis. Power Finance Corporation and REC may rally to Rs 190 and 150 levels, respectively. 

Shares of GAIL (India), Oil and Oil & Natural Gas Corporation have broken out on the bullish formation of “Golden Cross” and their respective chart patterns are now highlighting gradual upside on.  Medium-term support for Gail exists at 103, with the underlying trend suggesting an up move to Rs 134. 

Likewise, Oil and Oil & Natural Gas Corporation are pointing at Rs 295 and Rs 180, as their immediate reach, respectively. Both stocks have similar formation of “Rising Channel” pattern, inducing accumulation on the lower rising trendline. The breadth stays exceedingly optimistic, with stock price firmly holding the upward bias. 

Chart structure of NTPC, Hindustan Aeronautics, Coal India, National Aluminium Co., and Power Grid Corporation of India are presently pro advocating structure of accumulation and sideways trend.