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Investors with a contrarian view and short-term perspective can buy the stock of Tata Power at current levels. The stock was resilient and has outperformed the broader indices on Thursday, by gaining 6.7 per cent accompanied by above average volume. This rally has formed a bullish engulfing candlestick pattern on the daily chart which is a bullish reversal pattern. The stock recorded a new 52-week low at ₹34 and bounded up strongly.
On the weekly chart, the stock has formed a hammer pattern which is also a bullish reversal pattern backing the trend reversal. The daily RSI is recovering from the oversold territory. Besides, the stock tests the lower boundary of the Bollinger Bands that implies oversold and is likely to bounce from the lower end.
The daily price rate of change indicator is also recovering from the oversold territory. The near-term outlook appears to be bullish for the stock. It can continue to trend upwards and reach the price targets of ₹42.5 and ₹43.5 in the ensuing trading sessions. Traders can buy the stock with a stop-loss at ₹39.
(Note: The recommendations are based on technical analysis. There is a risk of loss in trading.)
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