Torrent Power Ltd shares have advanced over 48 percent so far in 2021, outpacing a 16 percent rally in the Nifty 50 and an over 19 percent gain in the BSE 200 index.
With a market capitalisation of more than Rs 22,600 crore, the stock hit a fresh 52-week high of Rs 508.85 on the BSE on June 9 and has been consolidating since then.
The stock took support at Rs 445 on June 25 and bounced back. It retested that level on July 28, recovering from an intraday low of 446.30.
Experts said the stock is showing signs of bottoming out and a close above the 50-day EMA placed at Rs 459.93 confirms the bullish bias. The momentum could take the stock towards Rs 520-540 in the next two to three months, which translates into an upside of 12 percent from the August 3 close of Rs 464.45.
Torrent Power is one of the largest private sector power companies with interests in electricity generation, transmission, distribution and manufacturing, and supply of power cables.
Technically, the stock was in a consolidation phase from October 2020 to mid-February 2021 and thereafter broke out above the Rs 350 level and picked up momentum to scale new highs.
According to Vaishali Parekh, assistant vice president – technical research, at Prabhudas Lilladher, the stock has overall indicated a rising trend with a bullish bias. Currently, the stock has shown signs of bottoming out near the 445 level and has indicated a reversal with bullish candle pattern visible in the daily chart.
“Also, the stock has moved past the significant 50-day EMA level of 455 to further improve the bias and has indicated strength to carry on the momentum still further upside in the coming days. The indicator like RSI (relative strength index) has also shown a trend reversal to signal a buy and is well placed with potential to rise further upward and thus justifying our view of a positive bias in the stock,” he said.
Parekh added that, technically, the stock looks attractive and recommended buying it with a target of Rs 520-540 and a stop-loss at about Rs 445 over two to three months.Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions