Tata Power stock: Choice Broking expects recovery, assigns two price targets 

Shares of Tata Power Company Ltd are in a downtrend for the last two years. The Tata Group stock has lost up to 16% in two years. The stock is stuck in bear grip and trading below 20 day, 30 day, 50 day, 100 day, 150 day and 200 day moving averages. Amid the ongoing weakness, Choice Broking believes that Tata Power stock is showing a positive technical structure on the weekly chart with the stock taking major support near the weekly trendline.

Choice has two targets for the power sector stock.

"At current levels, Tata Power can be considered around Rs 368.30, with accumulation on dips up to Rs 360. The stock has the potential to move towards the first target of 398, followed by the second target of Rs 428 in the coming period," said the brokerage.

Additionally, the 200-week EMA is acting as a confluence support, strengthening the long-term technical setup and making the current levels important from a positional perspective. Momentum remains supportive, with the weekly RSI placed at 43 and showing scope for improvement from lower levels. The stock is currently trading around an important support area, where sustained buying interest could lead to a gradual recovery.

"On the downside, the Rs 340-343 zone remains important to watch, as holding this area would support the positive technical setup and improve the possibility of the stock continuing its recovery towards the stated targets," Choice Broking said.

This week, Nuvama assigned a rating and price target upgrade to the Tata Group stock. The brokerage upgraded the Tata Group firm to ‘BUY’ as per its Bull Case target price of Rs 421. Earlier the price target stood at Rs 400 per share.

Nuvama said the stock has corrected 8% post the adverse ruling in the Kleros arbitration case last week, implying a potential cash outgo of $490–640 mn, that is Rs 20 per share implying its Bear Case target price of Rs 363. At the current market price, the arbitration overhang is largely priced in, the brokerage added.