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Is it Time to Buy Energy Stocks?

May 13, 2022

Indian benchmark index Nifty has corrected over 1,000 points in May so far. Along with the Nifty, sectoral indices have felt the pain too.

Among sectoral indices, the Nifty Energy index fell in sync with benchmark indices. In last 8 trading sessions, the index has corrected 13% from the high of 29,304.

Technically, the energy index is at a demand zone and bulls should grab this opportunity.

Nifty Energy Index Daily Chart

 

The resistance turns support at 25,500 indicated by horizontal trendline (black) on chart. This signals the demand zone.

The breakout has also been retested, offering the best risk-reward opportunity.

The 100 DEMA (Daily Exponential Moving Average) is placed above the demand zone at 25,674 which acted as support for the bulls.

Relative Strength Index (RSI) is trending at the demand zone. The slope of line is turning northwards. This indicates the bulls are in control of the trend.

Investors and traders should buy this dip in energy stocks.

Here's how the constituents of Nifty Energy index have performed:

Nifty Energy Index Constituents

Company Name YTD (%) 1 Year (%)
Adani Green Energy Ltd. 83% 132%
Adani Transmission Ltd. 26% 82%
Bharat Petroleum Corporation Ltd. -12% -24%
GAIL (India) Ltd. 16% -7%
Indian Oil Corporation Ltd. 9% 19%
NTPC Ltd. 19% 31%
Oil & Natural Gas Corporation Ltd. 10% 36%
Power Grid Corporation Of India Ltd. 15% 39%
Reliance Industries Ltd. 1% 25%
Tata Power Company Ltd. -1% 106%
Source: Equitymaster

At present, the Nifty energy index is trading at 25,960 levels, up 0.9%.

From the index, Reliance and Tata Power are the top gainers while Power Grid is the top loser.

I'll share more on this on my telegram channel.

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Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such.

Brijesh Bhatia

Brijesh Bhatia Research Analyst and expert chartist, is the editor of Alpha Wave Profits. Fully committed to his craft, Brijesh has mastered the art of making money by trading using technical analysis. Brijesh has an MBA from ICFAI and 16 years of experience in India's financial markets. He began his career on Dalal Street as commodities dealer and it wasn't long before he developed his own unique trading system. Brijesh worked on his trading system until it could be expected to deliver 5 units of return for every unit of risk.

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