IREDA shares gain 11% from 52-week low: Value pick or a momentum trap?

Shares of Indian Renewable Energy Development Agency Ltd (IREDA) have recovered over 11% from their 52-week low in a month. IREDA stock is also in a short-term uptrend, signals its simple moving averages. The stock trades above its 5 day, 10 day, 20 day, 30 day and 50 day simple moving averages. 

However, IREDA shares are down 38% from their 52-week high of Rs 231.85 reached on January 6, 2025. The stock has slipped 32% in a year, signalling medium-term correction in the PSU stock. 

The stock is trading neither in the oversold nor in the overbought zone, indicates its RSI, which is at 58.7. A RSI value below 30 signals the stock is trading in the oversold zone and above 70 it signals is trading in the overbought zone. 

In the current session, IREDA stock fell 0.66% to Rs 143.50 on BSE. Market cap of the renewable energy stock stood at Rs 40,312 crore. Later, IREDA shares closed 0.66% lower at Rs 143.50 on Tuesday.  

IREDA stock touched an all-time high of Rs 310 on July 15, 2024. 

Om Mehra, Technical Research Analyst, SAMCO Securities said, "IREDA has shown early signs of stabilisation after a prolonged corrective phase, with the stock attempting to build a short-term base near the Rs 138–Rs 140 zone. The Rs 140 zone acts as an immediate support, followed by a stronger base in the Rs 133–Rs 135 range. As long as the stock sustains above this band, the risk of a deeper breakdown remains limited. On the upside, a close above Rs 150 would be required to improve short-term momentum and open the path toward Rs 160–Rs 165. Sustained strength above Rs 150, along with improving volumes, will be important to watch for a healthier recovery. The stock may be added in tranches for a medium- to long-term investment horizon."

Jigar S Patel from Anand Rathi said, "Support will be at Rs 138 and resistance Rs 150. A decisive move above the Rs 150 level may trigger a further upside of Rs 155. The expected trading range will be between Rs 138 and Rs 155 for the short-term."

Aakash Shah, Research Analyst, Choice Broking said, "IREDA is showing early signs of a trend reversal after a prolonged corrective phase. 
Structurally, the 129–132 zone remains a strong demand base and acts as a critical invalidation level. As long as price holds above this area, the double bottom remains intact. On the upside, a decisive breakout and acceptance above the 148–150 neckline zone would confirm the reversal and open the path toward the 160–170 resistance zone, where higher moving averages are positioned."

IREDA is a Mini Ratna (Category - I) government enterprise. It is administratively controlled by the Ministry of New and Renewable Energy (MNRE). IREDA has been actively promoting, developing, and extending financial assistance for new and renewable energy projects, as well as energy efficiency and conservation projects for over 36 years.