By brijesh bhatia
January has been a turbulent ride for stock market traders, with swings that have left them on the edge of their seats. As the dust begins to settle, all eyes are now on the upcoming Union Budget, scheduled for February 1, 2025. With the government’s financial roadmap set to unfold, the focus is shifting towards key sectors that may benefit from potential policy changes. Among these, CPSE (Central Public Sector Enterprises) seems to be garnering attention, with its performance on the chart signalling possible bullish momentum.
The Nifty CPSE index, which represents the performance of public sector enterprises in Indiahas seen an intriguing uptick.
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Source: TradePoint, Definedge Securities
On technical charts, this index shows some key bullish patterns that suggest a potential breakout. For those familiar with the Point and Figure (P&F) charting technique, the formation of a bullish anchor column and the Double Top Buy (DTB) pattern strongly signals a bullish reversal, indicating that a positive trend may be on the horizon.
The D-Smart Line indicator is closely monitored to add further weight to the bullish outlook. This tool is designed to highlight breakout levels and trend shifts. Currently, the breakout point for the Nifty CPSE index is pegged at 6,310. A close above this level would trigger a surge in bullish momentum, confirming the positive sentiment that has been building.
The All Chart Matrix is useful for traders looking to identify the best CPSE stocks to capitalise on this potential bullish trend.
Developed by Definedge, the All Chart Matrix is a unique feature that scores stocks based on their technical setups across multiple timeframes. By evaluating price action in different timeframes—short, medium, and long—the matrix assigns a score of 1 for bullish price action and 0 for bearish.
Source: RZone, Definedge Securities
Let us discuss the chart of the top two performing stocks – NBCC and Oil India.
NBCC (National Buildings Construction Corporation) is a prominent public sector enterprise in India, known for its significant contribution to infrastructure development and construction projects.
NBCC Weekly Candlestick Chart
Source: TradePoint, Definedge Securities
On the weekly chart, the stock price of NBCC signals a potential reversal from the 62WEMA (Exponential Moving Average) channel, which is constructed using both the 62WEMA (High) and 62WEMA (Low).
The appearance of a Bullish Engulfing pattern at a key support zone further supports the possibility of a reversal. Moreover, a positive divergence on the Relative Strength Index (RSI) adds strength to the case for a potential upward movement.
With both the candlestick reversal pattern and the positive divergence on RSI, there is a strong indication that NBCC’s stock may potentially experience upward momentum in the coming weeks.
2. Oil India
Oil India Limited, a prominent player in the Indian oil and gas industryhas established itself as a key contributor to the country’s energy sector.
Oil India Hekin Ashi Weekly Chart
Source: TradePoint, Definedge Securities
On the Weekly Heikin Ashi Chart, the share price of Oil India is witnessing a Bullish Reversal of Heikin Ashi Candles that suggests a potential shift in momentum. While strong trending Heikin Ashi candles have yet to form, this reversal points to the bulls starting to gather strength.
The bullish reversal candles emerged at the 62-week exponential moving average (62WEMA) channel, which offers key support for the bulls.
On the RSI front, the bullish crossover observed after August 2024 indicates the end of the bearish momentum and the onset of a new upward trend.
With the bullish reversal candles and the bullish crossover on the RSI, the stock price is potentially set for the new beginning.
A sector and stocks to watch
With the Union Budget just around the corner, the CPSE sector seems poised for a possible breakout. The combination of technical indicators such as the Point and Figure patterns, the D-Smart Line breakout, and the actionable insights from the All Chart Matrix suggests that CPSE stocks may be warming up for a strong move in the coming weeks. The stage is set for NBCC and Oil Indiaand CPSE could be a sector to watch as we head into February 2025.
Disclaimer
Note: We have relied on data from http://www.definedgesecurities.com throughout this article. Only in cases where the data was not available have we used an alternate but widely used and accepted source of information.
The purpose of this article is only to share interesting charts, data points and thought-provoking opinions. It is NOT a recommendation. If you wish to consider an investment, you are strongly advised to consult your advisor. This article is strictly for educative purposes only.
Brijesh Bhatia has over 18 years of experience in India’s financial markets as a trader and technical analyst. He has worked with the likes of UTI, Asit C Mehta, and Edelweiss Securities. Presently he is an analyst at Definedge.
Disclosure: The writer and his dependents do not hold the stocks discussed in this article. However, clients of Definedge may or may not own these securities. The website managers, its employee(s), and contributors/writers/authors of articles have or may have an outstanding buy or sell position or holding in the securities, options on securities or other related investments of issuers and/or companies discussed therein. The articles’ content and data interpretation are solely the personal views of the contributors/ writers/authors. Investors must make their own investment decisions based on their specific objectives, resources and only after consulting such independent advisors as may be necessary.