Adani Ports, NTPC among 5 Nifty stocks in overbought zone; check key levels

In a bull market, stocks tend to remain in overbought zone for a longer period viz-a-viz a bearish phase. Presently, 18 stocks from the Nifty index were technically trading in overbought zone.

With the markets rattling new highs this December, stocks across-the-board have witnessed a phenomenal rally on the bourses. Now, with the US Federal Reserve finally signaling an end to the policy tightening and a possibility of 3 rate cuts in the next calendar year, the bulls just got the extra impetus.

However, given the sustained rally select stocks including the benchmark index have entered overbought zone. Technically, a RSI (Relative Strength Index) reading above the 70 level is considered overbought in the market. It’s important to note, that stocks continue to rally in overbought conditions too as long as other momentum oscillators remain supportive.

Further, in a bullish market, stocks tend to remain in overbought zone for a longer period viz-a-viz in a bearish scenario. Hence, one should not consider stocks in overbought zone as a sign of likely reversal, but instead wait for other confirmative signals.

Presently, as many as 18 stocks from the Nifty50 index were seen quoting with 14-day RSI above 70 levels, of which 2 stocks RSI was above 80-level - namely - Adani Ports and NTPC.

Here's a quick chart check on 5 out of the 10 Nifty stocks that trade with a RSI in excess of 75 levels. 

Adani Ports

Current Price: Rs 1,069

Key supports: Rs 1,020; Rs 985

Post the sharp rally earlier this month; Adani Ports has been consolidating with a positive bias, hence the 14-day RSI is seen hovering above 85 levels. Among other key momentum oscillators the MACD (Moving Average Convergence-Divergence) and the Stochastic Slow are still favourably placed.

For now, the recent low around Rs 1,020 remains the key support for the stock. Whereas, the weekly chart suggests that the bias is likely to remain bullish as long as the stock holds above Rs 985 level. CLICK HERE FOR THE CHART

Bajaj Auto

Current Price: Rs 6,320

Support: Rs 5,960

Shares of Bajaj Auto have witnessed a steady climb since the start of the financial year FY24. The stock has rallied nearly 76 per cent during this period. Further, the RSI for the stock has been holding in the overbought zone since mid-November, and the stock has gained over 14 per cent in the last one month, clearly highlighting the bullish undertone at the counter.

So now, even as the RSI quotes near about 80 level, the stock is likely to trade with a positive bias, with some resistance expected around Rs 6,450, which is the higher-end of the Bollinger Bands on the daily chart, and support around the 20-DMA at Rs 5,960 levels. CLICK HERE FOR THE CHART

HCL Technologies

Current Price: Rs 1,408

Key support: Rs 1,393
 

HCL Technologies has given a fresh breakout on the daily chart, and is seen trading firmly above the higher-end of the Bollinger Bands on the daily scale. The near-term bias for the stock is likely to remain positive as long as the stock holds above Rs 1,393. CLICK HERE FOR THE CHART

ICICI Bank

Last close: Rs 1,038

Key support: Rs 1,015

The stock has gained close to 5 per cent after its RSI entered overbought zone earlier this month. The overall bias continues to remain positive, with RSI and the MACD in favour of the upside. However, the Stochastic Slow is seen converging and may turn negative soon, in case the stock dips.

For now, the stock seems to have created a higher support at Rs 1,015 levels. The weekly chart is clearly in favour of further upside for the stock. The bias is likely to remain upbeat as long as the stock holds Rs 1,015. CLICK HERE FOR THE CHART

NTPC

Last close: Rs 294.50
Key support: Rs 285

The stock has rallied over 14 per cent ever since its RSI entered overbought zone in late November. Key momentum oscillators although stretched remain favourable for the stock. However, the directional index is seeing some convergence, hence may trigger bouts of volatility at the counter.

The weekly chart suggests that the bias for the stock is likely to remain favourable as long as it holds above Rs 285 level. CLICK HERE FOR THE CHART