Three energy stocks that are breaking through on the charts

The Indian stock market is ablaze with optimism with the Nifty approaching the 26,000-point mark, indicating a bullish phase that continues to gain momentum.

Bank Nifty was in the spotlight last week, rising to 54,000 points on a sharp rise in short-covering led by major private lenders including HDFC Bank Ltd, ICICI Bank Ltd, Axis Bank Ltd and Kotak Bank Ltd.

But banking stocks aren’t the only ones on the rise. The Indian energy sector has resumed its uptrend, and these three energy stocks are breaking out on the charts and could potentially ride that momentum to new highs.

NTPC

NTPC Ltd, India’s largest energy conglomerate, is key to meeting the country’s energy needs. Known for its strong portfolio of coal-fired power plants and ongoing efforts to expand into renewable energy, NTPC remains a key player in the Indian energy sector.

Technically, NTPC is tracing an upward trajectory on its weekly bar chart, showing a consistent pattern of a higher high and a higher low. This structure, consistent with the Dow Theory, confirms that bulls are in control. The stock recently broke out from its previous high around ₹390 and underwent a retest in mid-September. That retest occurred in a downtrend, but the stock broke out again on the bullish side, solidifying its upward trajectory.

The structure of the graph now suggests that ₹400 has formed a base. After a breakout, NTPC could potentially be ready for new milestones.

Power Dad

Tata Power Ltd is another pillar of the Indian energy sector. Its diversified portfolio includes both conventional power generation and renewable energy. Its strategic initiatives in solar infrastructure and electric vehicle charging further enhance its growth potential in the changing energy landscape.

On the technical front, Tata Power posted a breakout on the Daily 0.25% X 3 Point & Figure* (P&F) chart, breaching the triple top breakout level, a pattern known to signal continuation of the uptrend.

The recent retracement of the downtrend shows that the stock did not continue lower, which could suggest that the retracement was simply part of a broader uptrend.

Additionally, the retracements around the 20-column exponential moving average (EMA) were well confirmed, which indicates that this zone is an area of ​​demand for the stock.

Tata Power has the potential to sustain its upside momentum as bullish tailwinds continue unless the triple top breakout is pared down below ₹Level 425.

What is a point and figure chart?

A point and figure chart is a charting method that uses X and O. X indicates bullish moves, while O indicates bearish moves. Unlike traditional time-based charts, P&F charts focus solely on price changes and are considered noise-free. They filter out minor price fluctuations, highlighting significant trends and reversals. The lack of time constraints provides a clearer picture of supply and demand dynamics, helping analysts make more informed decisions.

JSW Energy

JSW Energy Ltd is a leading player in the energy sector, with operations across energy segments including thermal and hydro. Its focus on renewable energy expansion and strategic growth initiatives positions the company as a significant contributor to India’s sustainable energy future.

On the daily chart of 0.25% X 3 Point & Figure, JSW Energy broke out from a significant resistance zone, turning this level into a zone of strong demand.

Historically, these stocks have tended to break out of similar ranges, only to later see those resistance levels turn into strong support.

Currently, JSW Energy is exhibiting an Anchor Column Follow-Through (AFT) pattern, which comes after a successful test of a demand zone. This bullish follow-through pattern is a strong signal that the stock could potentially head towards a new bull phase, with the potential to scale new highs as it benefits from the renewed vigour in the Indian energy sector.

Sector rotation can be difficult to plan for, but with the right tools and a focus on breakout stocks, opportunities can arise.

Note: The purpose of this article is to provide interesting charts, data points, and thought-provoking opinions only. This is NOT a recommendation. If you wish to consider investing, we strongly recommend that you consult with an advisor. This article is for educational purposes only.

Brijesh Bhatia has over 18 years of experience in Indian financial markets as a trader and technical analyst. He has worked with companies like UTI, Asit C Mehta and Edelweiss Securities. He is currently an analyst at Definedge.

Disclosure: The author and his dependents do not own the stocks discussed here. However, Define Edge clients may or may not own these securities.