The long-term outlook is bullish for the BSE Energy index. The index began the year on a weak note. It tumbled over 15 per cent in the first quarter of 2023. However, it has managed to recover almost all the loss thereafter. The BSE Energy index is currently at 8,758.92, down 0.63 per cent for the year.

Prolonged consolidation

The BSE Energy Index (8,758.92) has been in a sideways consolidation for almost two years now. The index has been oscillating between 7,080 and 9,060 since December 2021. This consolidation is intact. Within this broad range, the index has been moving up. As such, the chances are high for the BSE Energy index to move up towards 9,000 by the end of this year or early next year.

Medium-term view:

Chart Source: MetaStock

Chart Source: MetaStock

The outlook is bullish, but crucial resistances ahead will need a close watch. The index has been getting strong support in the 8,100-8,000 region since August. That leaves the chances high for the index to breach 9,060 in the coming months. Such a break can take the BSE Energy index up to 9,500-9,600 in the first quarter next year. The price action, thereafter, will need a very close watch. Failure to rise past 9,600 can trigger a corrective fall to 9,200-9,000. However, a further fall below 9,000 could be difficult.

Long-term outlook: After the above-mentioned corrective fall, the index can get a fresh leg of upmove anywhere from the 9,200-9,000 support zone. From a long-term perspective, that leg of upmove will have the potential to break above 9,600. Such a break will see the BSE Energy index surging towards 11,000-11,500 by the end of 2024 or in early 2025.

Chart Source: MetaStock

Chart Source: MetaStock

The levels of 7,500 and 7,300 are crucial supports. The index will come under pressure to fall below 7,000 if it declines below 7,300. Only in that case, the above-mentioned bullish view will come under threat of going wrong. A decisive break below 7,000 will turn the outlook bearish and drag the index down to 6,500 and lower. But such a break and fall looks unlikely at the moment.

Key Levels
Supports: 8,100-8,000 and 7,500-7,300
Resistance: 9,500-9,600
Long-term target: 11,500-12,000
Stocks to watch

On the charts, the following stocks are looking bullish within the BSE Energy Index. Bharat Petroleum Corporation Ltd (BPCL), Hindustan Petroleum Corporation Ltd (HPCL) and Indian Oil Corporation Ltd (IOCL). These stocks are currently at ₹410, ₹320 and ₹104 respectively. Long-term investors with a holding period of more than one year can consider buying any of the above-mentioned stocks.

However, investors who intend to buy these stocks have to do their own due diligence before buying them. Proper risk management strategies are also a must before entering these stocks.