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We recommend a buy in the stock of Tata Power from a short-term perspective.
It is evident from the charts of the stock that after taking support at around Rs 94 in late June and early September, the stock started to trend upwards. On Friday, the stock jumped 4 per cent with above average volumes, breaching a key resistance as well as its 200-day moving average at Rs 100.
Moreover, the stock has breached its moving average compression (21-, 50- and 200-day moving averages) poised at around Rs 98.
With this up move the stock appears to have resumed its medium-term uptrend that has been in place since its May low at Rs 85. The daily relative strength index has entered in to the bullish zone and weekly RSI is inching higher in the neutral region.
After signalling a buy, the daily moving average convergence divergence indicator entered in to the positive territory implying further upward momentum.
Moreover, the daily price rate of change indicator is featuring in the positive terrain implying buying interest. We are bullish on the stock from a short-term perspective. We anticipate the stock’s up move to continue and reach our price target of Rs 107 or Rs 109 in the forthcoming trading sessions. Traders with short-term perspective can consider buying the stock while maintaining stop-loss at Rs 100.5 levels.
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