Nifty PSU index has been consolidating for the last 15 years. The index has now witnessed a breakout of this multi-year consolidation on monthly charts. The index is expected to pick up pace once RSI crosses 70 levels. ADX is trading above 24 levels which usually signals a strong uptrend in the making. The index is expected to rise towards 13,500 levels in the next 3-5 years, InCred Equities said.
Based on a technical analysis report on the Nifty PSE Index by InCred Equities, 4 stocks can rally up 206% in the 2-3 years of time frame. These stocks include Power Finance Corporation and BHEL. Here's a list:
Powergrid had witnessed a 13-year breakout on monthly charts from a rising wedge pattern. The stock then witnessed a retest of this multi-year breakout and has witnessed a smart bounce since then. The stock has bounced strongly from its 21 EMA on monthly charts, which suggests the stock can continue its uptrend till it doesn’t close below the breakout area. RSI has bounced from the support area and once it crosses 70, the stock price can witness a strong thrust.
Power Finance Corporation has given a 13-year breakout on monthly charts and is now set to witness a major upside in coming quarters. The stock has also confirmed breakout on Heikin Ashi charts, which are a better indicator for breakout patterns. Monthly RSI has given a 9-year breakout which suggests the stock can start a fresh uptrend.
MACD had already given a bullish crossover, and there has been follow-up buying post this signal which supports the postulate of a major upside. ADX is trading near 24 which is another signal of a robust upside going forward.
BHEL was trading in a 15-year downtrend with the formation of lower highs and lower lows on monthly charts. The stock has confirmed trend reversal with the formation of higher highs and higher lows and is now expected to witness a multi-year uptrend. The stock has also given a breakout from a descending channel pattern on monthly charts and is trading near previous swing highs. Such pattern breakouts tend to result in a major upside in the stock price. A healthy 61.8% retracement of the fall that started with downtrend results in the stock jumping 3-fold from current levels.
IRCTC has been one of the worst performers in the midcap space and has corrected by 50%. The stock has now formed a double bottom on weekly charts which is a reversal pattern in nature. The RSI has formed a bullish harmonic dragon pattern which is a manifestation of a double bottom pattern and is expected to result in a strong push to the stock price.
The stock has witnessed a bullish MACD crossover which confirms a major probable upside in the coming months. As per Elliott wave studies, the stock might have completed wave 4 and is now heading towards a fresh lifetime high to form wave 5 on the weekly charts.
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