Analyzing India

Greater Possibilities Of A Breakout In This Stock


With the session that ended on Tuesday, February 19, 2019, the Indian headline index NIFTY50 closed in the red for the eighth consecutive day. Amid such a weak environment, there are certain stocks which are showing great relative strength and are strongly outperforming the broader markets. Once such stock that deserves attention is PFC.IN.

Power Finance Corp. Ltd (PFC.IN)

  • PFC.IN presently remains under a bullish Ascending Triangle formation. This formation resulted from a price action where the stock formed near similar tops at 108.55 and 110.30 and rising bottoms at 83 and 98, as evident from the above chart.
  • Usually, the Ascending Triangle pattern is resolved on the upside. Few signals have emerged through which we can anticipate this move with greater probability.
  • The RS Line, when compared against the broader CNX500, has not only reversed its trend, but has broken out of a formation. It has also crossed above its 50-DMA as the stock still awaits a breakout.
  • On Balance Volume (OBV), which is a volume indicator, has also reported a fresh high ahead of the stock moving out of its present formation.
  • Daily MACD has shown a positive crossover and trades above its signal line. PPO, too, has turned positive. RSI is seen firmly moving higher and has marked a fresh 14-period high, which is bullish.
  • The stock price has ended above the upper Bollinger Band. Though some temporary pullback inside the band cannot be ruled out, it signals greater probability of the price moving higher, resulting in a likely breakout.
  • If the present pattern on the chart is resolved in the expected direction, the stock could test the levels of 120-130 over coming days. Any price action below 98 would be negative for the stock.

Milan Vaishnav, CMT, MSTA
Consulting Technical Analyst

Disclosure pursuant to Clause 19 of SEBI (Research Analysts) Regulations 2014: Analyst, Family Members or his Associates hold no financial interest below 1% or higher than 1% and have not received any compensation from the Companies discussed.

Announcement from the Author

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Milan Vaishnav
About the author: , CMT, MSTA is a qualified Independent Technical Research Analyst at his Research Firm, Gemstone Equity Research & Advisory Services in Vadodara, India. As a Consulting Technical Research Analyst and with his experience in the Indian Capital Markets of over 15 years, he has been delivering premium India-focused Independent Technical Research to the Clients. He presently contributes on a daily basis to ET Markets and The Economic Times of India. He also authors one of the India's most accurate "Daily / Weekly Market Outlook" -- A Daily / Weekly Newsletter,  currently in its 15th year of publication. Milan's primary responsibilities include consulting in Portfolio/Funds Management and Advisory Services. His work also involves advising these Clients with dynamic Investment and Trading Strategies across multiple asset-classes while keeping their activities aligned with the given mandate. Learn More
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