Shares of power-related companies have soared up to 50 per cent thus far in April in anticipation of higher demand in summer. The Nifty Energy index has rallied 15 per cent so far this month. In comparison, the NSE benchmark Nifty and the broader Nifty 500 index have gained 9 per cent and 12 per cent, respectively. Among individual stocks - Adani Green Energy, Reliance Power and Adani Energy Solutions have zoomed in the range of 45 - 50 per cent each. Jaiprakash Power Ventures, Adani Power, Inox Wind, Suzlon Energy and Bharat Heavy Electricals (BHEL) have jumped 35 - 43 per cent. Given the sharp rally, 20 out of the Nifty Energy 40 shares are currently trading in overbought territory based on the 14-day Relative Strength Index (RSI) parameter on the daily charts. Technically, the RSI indicator helps determine overbought and oversold stocks based on the recent price action. In general, a RSI reading above 70 is considered as overbought, while a reading below 30 is considered as oversold. Analysts, however, caution that stocks trading can stay in overbought and oversold conditions for a prolonged period of time. Rajesh Bhosale, Technical Analyst at Angel One believes that overbought conditions can persist during strong trends, as they also reflect inherent strength. ALSO READ | How to trade Vedanta stock ahead of demerger record date? Analyst decodes The analyst says even as the Nifty Energy trades in overbought territory, he expects the outperformance to continue and projects an upside target of 45,000 in the coming months. This translates into a potential upside of around 12.5 per cent from current levels. "However, considering on-going market volatility and uncertainty around global developments, short-term traders are advised to book partial profits," reckons Bhosale. On the downside, the breakout zone near 38,000 is expected to act as strong support, while immediate resistance is placed around 43,500 for the Nifty Energy, the analyst adds. Here's a technical outlook on Adani Power, BHEL and Suzlon Energy by Rajesh Bhosale, Technical Analyst at Angel One.
Adani Power
Current Market Price: ₹215
Bhosale highlights that despite being in the overbought zone Adani Power has not shown any signs of weakness in the trend. However, the analyst cautions that given the sharp deviation from short-term moving averages, some consolidation or mild correction cannot be ruled out due to mean reversion. As a trading strategy, he suggests short-term traders can book partial profits. The stock may find immediate support around ₹200 – ₹195, while facing resistance near ₹230 levels, Bhosale add.
BHEL
Current Market Price: ₹334
Even as indicators are in the overbought zone, the broader structure for BHEL remains positive, asserts the analyst from Angel One. Bhosale highlights that the stock has broken out of a long-term consolidation phase of nearly 19 years, which typically indicates the beginning of a sustained uptrend. "Short-term traders may consider booking profits, while long-term investors can continue to hold positions," he reckons.
Suzlon Energy
Current Market Price: ₹54.10
Suzlon is currently approaching a key trendline resistance in the ₹57 – ₹59 zone, where some profit booking may emerge, cautions Bhosale. The analyst notes that trading action around ₹60 will be crucial in the near-term. He believes that a sustained move above ₹60 levels could trigger further upside towards ₹67 – ₹70 levels. On the downside, he sees immediate support around ₹50 levels. Disclaimer: The views expressed by the brokerage/ analyst in this article are their own and not those of the website or its management. Business Standard advises users to check with certified experts before taking any investment decisions. Analyst Disclaimer: I/We am/are a [SEBI Registered Research Analyst - INH000000164]. The views expressed are my personal views and not investment advice. I/my associates/relatives do not have any financial interest or hold positions in the stocks/derivatives/commodities being discussed. There are no conflicts of interest. However, some of our clients may have positions in them. Investment in securities market are subject to market risks. Past performance is not indicative of future results.