Technical Analysis

Stock query: NTPC witnesses bullish momentum

Yoganand D | Updated on August 23, 2020

Has the potential to test key resistances at ₹115 and ₹125 in the medium term

Here are the answers to readers’ queries on the performance of their stock holdings.

What is your view on NTPC? I have been holding the stock for long.

Narasingh Mohanty

NTPC (₹105.9): The stock of NTPC was on highlight last week as it sky-rocketed almost 20 per cent accompanied by extraordinary volume. This rally conclusively breached the significant as well as the psychological resistance level of ₹100.

Following an intermediate-term downtrend, the stock had recorded a multi-year low at ₹74 in late March this year and bounced up. Thereafter, it had been on a sideways consolidation phase in the band between ₹85 and ₹100 from April to until recently.

The on-going rally has emphatically breached the 200-day moving average, and the stock trades well above this and the 50-day moving average. Moreover, the rally has strengthened the bullish momentum. There has been an increase in daily volume over the past five trading sessions.

The daily relative strength index (RSI) features in the bullish zone and the weekly RSI is on the brink of entering the positive territory from the neutral region.

Besides, the daily and the weekly price rate of change indicators are hovering in the positive terrain, implying buying interest.

The medium-term outlook is bullish for the stock.

It has the potential to trend higher and test key resistances at ₹115 and ₹125 in the medium term.

A strong break above ₹125 will alter the intermediate-term downtrend and take the stock northwards to ₹135 and then to ₹147 over the long run.

The supports below ₹100 are at ₹92 and ₹85. A fall below ₹85 can bring back selling interest and drag the stock down to ₹80 and then to ₹75.

Investors with a long-term perspective can stay invested with a stop-loss at ₹83.

Can you please let me know the prospects of Karnataka Bank from a one-year perspective?


Karnataka Bank (₹47): Witnessing buying interest, the stock of Karnataka Bank jumped 6.7 per cent accompanied by above-average volume on Friday, breaking above the vital resistance level of ₹45. Since recording a 52-week low at ₹34.2 in late May this year, the stock has been on a medium-term uptrend. A further rally above ₹52, can take the stock higher to ₹56 and then to ₹62 in the medium term. The next key barriers are at ₹70 and ₹82.

That said, the long-term downtrend that has been in place since the June 2017 high of ₹164 will remain in place as long as the stock trades below the crucial resistance level of ₹110. If the stock fails to move beyond ₹52, it can experience a sideways movement with a positive bias.

On the other hand, a fall below the immediate support level of ₹45 can pull the stock lower to ₹41 and then to ₹35 in the medium term. Investors with a medium-term perspective can stay invested with a stop-loss at ₹40.

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Published on August 23, 2020

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