News

Published: May 31, 2024
Updated: May 31, 2024

Trading Insights: Adani Power, ITC, and Cochin Shipyard

Market Overview

On Thursday, Indian benchmark indices closed lower amid the monthly expiry of May Series F&O contracts. Weak global cues and election-related volatility contributed to market declines, leading to profit booking. The BSE Sensex dropped 667.55 points, or 0.89%, closing at 74,502.90, while the NSE Nifty50 fell 183.45 points, or 0.80%, to 22,704.70.

Adani Power: Bullish Outlook

Recommendation: Buy | Target Price: ₹790 | Stop Loss: ₹655

Adani Power's price action is currently trading within a volatility contraction pattern, suggesting accumulation by significant market participants. This pattern points to bullish strength and trend continuation. The stock shows robust price and EPS strength, indicating increasing buyer demand. Investors are advised to buy Adani Power with a target of ₹790 and a protective stop loss at ₹655.

ITC: Negative Bias

Recommendation: Avoid

ITC's weekly price action exhibits a negative bias, characterized by a lower high and lower low structure. The 50-week moving average (MA) acts as a strong resistance, with the price facing multiple rejections from this level. Given this negative bias and resistance, it is recommended to avoid taking fresh long positions in ITC at the current market price.

Cochin Shipyard: Overbought Conditions

Recommendation: Avoid

Cochin Shipyard has experienced a parabolic surge of 923% from its March 2023 lows. However, the Relative Strength Index (RSI) across daily and higher timeframes indicates overbought conditions, with the price action trading 21% above its mean. This suggests that the stock is vulnerable to profit-taking. As such, it is advisable to avoid chasing Cochin Shipyard at its current market price.

While Adani Power presents a buying opportunity due to its bullish trend and strong price action, ITC and Cochin Shipyard are recommended for avoidance due to their negative bias and overbought conditions, respectively. Investors should consider these insights when planning their trading strategies for these stocks.