Tata Power shares slip 6% from record high, overbought on charts; what’s next?

Shares of Tata Power slipped over 6% from their record high in early deals today amid a correction in the benchmark indices. The stock slipped 6.50% to Rs 405 today against the record high of Rs 433.20 reached on March 7, 2024. At 11:00 am, the Tata Power stock was trading 1.96% lower at Rs 424.95.

The power sector stock has gained 26% in 2024 and risen 100% in a year. Market cap of Tata Power fell to Rs 1.33 lakh crore on BSE. A total of 14.56 lakh shares of the firm changed hands amounting to a turnover of Rs 60.48 crore.

In terms of technicals, the relative strength index (RSI) of the stock stands at 74.7, signaling the stock is trading in the oversold zone. Tata Power shares are trading higher than the 5 day, 20 day, 50 day, 100 day and 200 day moving averages.

The Tata Group stock has a one-year beta of 0.6, indicating low volatility during the period.

Gaurav Bissa, VP, InCred Equities said, “Tata Power has been in a strong structural uptrend and managed to sail through the volatility quite comfortably. It earlier witnessed a bullish flag breakout on daily charts, which gave a push to the stock price towards Rs 400 levels. Tata Power has been consolidating since the last few days. However, it is forming an interesting pattern on point and figure charts. It will witness a bullish abc breakout follow through on a close above Rs 427 which can push it towards Rs 476 levels. Investors are advised to hold their positions with stop loss trailed to 385 levels whereas fresh buying is advised on a close above 427."

Abhijeet from Tips2trades said, "Tata Power is bullish & overbought on the Daily charts with next resistance at Rs 450. Investors should book profits at current levels as a daily close below the support of Rs 396 could lead to Rs 360 in the near term."

Shiju Koothupalakkal, Technical Research Analyst, Prabhudas Lilladher said, "With support from the 50 DMA, TATA POWER has given a good rally from Rs 259 towards a 52-week high of Rs 413, and now with strong volume, Tata Power has given a breakout above the previous peak level and made a high of Rs 433.30 . The stock is trading in the 'INSIDE BAR' pattern on the daily chart and a decisive close above 433 shall confirm the “ INSIDE BAR “ pattern breakout for further rises anticipated with indicators beginning to show strength. The RSI has given a decent momentum pickup, indicating strength and is well placed to support and justify our positive bias. Further upside targets can be expected til 486 and 500 levels in the coming days. One can keep watch on TATA POWER with the near-term support at the 50 DMA, which is around 370 zones below which the trend can turn weak."

Antique Broking has a target of Rs 450 on the stock.

“We have added the scope of potential windfall gains from spot market sales from CGPL, assuming PPA negotiations fail through. We assume this could be 30% of total PPA, which is exposed to Punjab, Haryana and Rajasthan," said the brokerage.

Tata Power stock declined to a 52-week low of Rs 182.45 on March 28, 2023.

Tata Power posted a 2.28 per cent rise in its third-quarter (Q3 FY24) consolidated net profit to Rs 1,076.12 crore as against Rs 1,052.14 crore in the year-ago period.

Revenue from operations climbed 3.69 per cent in Q3 FY24 to Rs 14,651 crore compared to Rs 14,129.12 crore in the corresponding quarter last fiscal.

Tata Power expenses climbed to Rs 14,254.11 crore in Q3 from Rs 13,745.89 crore in Q3 FY23. During the last quarter, EBITDA rose 15 per cent YoY to Rs 3,250 crore.