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We recommend a buy in NTPC from a short-term trading perspective. It is clearly visible from the charts of NTPC that the stock has been on a medium-term down trend from its July high of Rs 197, forming lower bottoms and lower tops. Recently, the stock’s medium-term downtrend accelerated and it witnessed a sharp fall from Rs 180 levels to Rs 148 levels. However, on October 20, the stock took support from its long-term support band of Rs 140-145 and bounced up with high volume and ended the session at Rs 151. We notice the presence of an intermediate-term support level of Rs 148 (June 2008 low). The stock price is trading closer to the lower band in Bollinger bands, indicating that it is oversold. Considering the significance of the long-term support level and the Bollinger bands indicating that the stock is oversold, we take a contrarian view on NTPC from a short-term perspective. We expect the stock to move up until it hits our price target of Rs 166 in the forthcoming trading sessions. Traders with short-term perspective can buy the stock while maintaining a stop-loss at Rs 144.

More Stories on : Stocks | Recommendation | NTPC Ltd

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