Trend reversal? Analyst decodes Havells India, NTPC, Birlasoft on charts

NTPC stock is showing early signs of a potential reversal, as it trades near its long-term support (200-week EMA) on the charts, says Sachin Gupta of Choice Broking.

Disclaimer: Views and outlook in this report belong to the brokerages and analysts cited. They do not reflect the views of Business Standard. Readers are advised to exercise discretion. Equity markets rebounded sharply in recent trading sessions amid a technical pullback from the oversold zone, drived by strong Q2 earnings from IT and select banks. Analysts, however, fear that high oil prices could weigh on the market sentiment. According to V K Vijayakumar, Chief Investment Strategist at Geojit Investments. Nifty's rally last week was due to good results from banking majors following better-than-expected results from leading IT companies. "Large-caps outperforming the mid-and small-caps is a rational trend, and this is likely to sustain, going forward," says the analyst. Vijayakumar, however, fears that escalation of the tensions in Hormuz and the consequent surge in Brent crude to $109 will act as a strong headwind to the market. Thus far in October, the Nifty and Nifty 500 have reversed a two-month losing streak, and are up 2 per cent and 0.6 per cent, respectively. Among stocks, IT stocks are seen among the top gainers in the Nifty 500. Tata Elxsi surged nearly 25 per cent so far this month. Against this background, Sachin Gupta, VP-Research at Choice Broking flags 3 stocks as potential reversal candidates based on charts: Havells India, Birlasoft and NTPC. Birlasoft and Havells surged 18 per cent and 12 per cent thus far in October, while NTPC declined 5 per cent. Here's why Sachin Gupta believes these 3 stocks are showing signs of a trend reversal on the charts. Check - TOP GAINERS NSE | TOP LOSERS NSE 

Birlasoft

Current Market Price: ₹316 

 

 

 Gupta reckons that Birlasoft is showing signs of a possible trend reversal after finding support in the ₹266–270 zone, near the lower Bollinger Band. On the weekly chart, the analyst flags that it has broken out of a Falling Wedge pattern with healthy volume and moved above the 20-week exponential moving average (EMA), suggesting an improvement in the short-term trend. Gupta believes that a sustained move above ₹330 could open the way towards ₹360–₹400. On the downside, he flags ₹266 as the crucial support. 

Havells India

Current Market Price: ₹1,108 

 

 "Havells India is showing some signs of recovery after bouncing back from the crucial ₹1,000–₹1,020 support zone, which acted as a base in December 2022," says Gupta. Adding that the stock moved above the 61.8 per cent Fibonacci retracement level at ₹1,082.10, indicating some improvement in its price structure. Gupta, however, cautions that the broader weekly trend remains weak, as Havells trades below its 50-week EMA and 200-week EMA which stand at ₹1,265 and ₹1,358, respectively. The analyst says that a sustained move above ₹1,265 could push the stock towards ₹1,300–₹1,360, while a break below ₹1,015 may drag it towards ₹850. 

NTPC

Current Market Price: ₹314 

 

 On a weekly chart, NTPC stock is trading near its 200-week EMA at ₹307, a crucial long-term support level, and is showing early signs of a potential reversal, says the analyst. "The RSI has recovered from the oversold zone to around 34, while support near the lower Bollinger Band and healthy trading volume at lower levels indicate emerging buying interest," explains Gupta. The analyst sees immediate support for NTPC at ₹296, and reckons that holding this level could pave the way for an upside move towards ₹340 and ₹360 in the short- to medium-term. However, a sustained move above immediate resistance levels would be required to confirm the reversal, adds Gupta.