Buy Adani Power stock; stay cautious on Suzlon Energy, SJVN shares, says Anand Rathi

Indian benchmark kicked off the week on a positive note to strong note as the benchmark indices scaled new highs. Positive economic data continued to support the buying sentiments at Dalal Street. BSE Sensex jumped 194.07 points or 0.24 per cent, to end the session at 82,559.84. NSE's Nifty50 rose 42.80 points, or 0.17 per cent, to close at 25,278.70 for the day.  

 

Some buzzing stocks including Adani Power Ltd, Suzlon Energy Ltd and SJVN Ltd are likely to remain under the spotlight of traders for the session today. Here is what Jigar S Patel, Senior Manager - Technical Research Analyst, Anand Rathi Shares and Stock Brokers has to say on these stocks ahead of Tuesday's trading session:

 

Suzlon Energy | Cautious

Suzlon has been trading within a narrow range over the past 17-18 days, fluctuating between the Rs 75-80 levels, and is currently positioned around the Rs 76 mark. This period of consolidation suggests indecision among traders, with neither bulls nor bears taking decisive control. On the hourly chart, the RSI has been consistently forming lower tops over the last 16 days, signalling weakening momentum and indicating the potential for a further decline in the stock price. As we look ahead, the levels around Rs 73-72 emerge as a key support zone that could provide a strong foundation for the stock. Given this setup, a prudent approach would be to adopt a 'wait and watch' strategy, holding off on any action until Suzlon tests this crucial support zone between Rs 72-73. This approach minimizes the risk of entering a position prematurely, allowing for a clearer confirmation of support before making any trading decisions

 

Adani Power | Buy | Target Price: Rs 750 | Stop Loss: Rs 625

Adani Power has undergone a substantial decline from its peak, which has brought the stock down to a crucial support level, where it has formed a triple bottom pattern within the Rs 630-650 range. The triple bottom pattern, especially when occurring at a previous demand zone, is often viewed as a bullish signal, indicating that the stock has found strong support at these levels and may be on the verge of a reversal. It experienced a surge in trading volume, suggesting renewed investor interest, and adding further weight to the bullish outlook. Additionally, the RSI on the daily chart has developed a complex W-shaped structure around the oversold zone, which is another indicator of potential bullish momentum in the coming sessions. These technical signals together make Adani Power an attractive buy candidate at current levels. Based on this analysis, entering a long position within the Rs 660-670 price range is recommended, with an upside target of Rs 750. To manage risk effectively, it is advised to place a stop-loss at Rs 625 on a daily closing basis to protect against any further downside potential.

 

SJVN | Cautious

SJVN has recently attracted attention due to a gap-up opening, suggesting positive momentum. However, despite this seemingly promising move, caution is warranted because the stock is approaching a critical resistance level at Rs 140. This resistance aligns with a bearish trendline on the daily chart, indicating a potential barrier to further upward movement. Additionally, the Relative Strength Index (RSI) on the daily scale remains below the 50 level, signaling that the stock is not yet in bullish territory and lacks the strength for a sustained rally. Given these factors, SJVN should be considered a 'wait and watch' candidate for now. Traders should monitor the stock closely, as fresh long positions would only be advisable if the stock closes above Rs 140 on a daily basis, confirming a breakout and potentially signaling the beginning of a stronger upward trend.