Tata Power Company Ltd. shares, which have experienced a two-year downtrend with a 16% loss, are now attracting optimistic forecasts from brokerage firms. Choice Broking believes the stock is poised for a recovery, citing positive technical indicators.
Choice Broking Sets Ambitious Price Targets
According to Choice Broking, Tata Power's weekly chart exhibits a positive technical structure, with the stock finding significant support near its weekly trendline. The brokerage recommends considering an entry around Rs 368.30, with further accumulation on dips up to Rs 360.
Choice Broking has assigned two price targets for the power sector stock: an initial target of Rs 398, followed by a second target of Rs 428. This outlook is bolstered by the 200-week Exponential Moving Average (EMA) acting as a crucial confluence support, reinforcing the long-term technical setup.
The brokerage also noted that the weekly Relative Strength Index (RSI) is positioned at 43, indicating potential for improvement from current levels. On the downside, the Rs 340-343 zone is identified as a critical support area; maintaining this level would strengthen the positive technical outlook and enhance the likelihood of achieving the stated recovery targets.
Nuvama Upgrades Rating Despite Arbitration Concerns
Adding to the positive sentiment, Nuvama recently upgraded its rating for Tata Power to ‘BUY’, setting a Bull Case target price of Rs 421. This marks an increase from its previous target of Rs 400 per share.
Nuvama's upgrade comes despite a recent adverse ruling in the Kleros arbitration case, which could imply a potential cash outflow of $490–640 million (approximately Rs 20 per share). This arbitration outcome had led to an 8% correction in the stock price. However, Nuvama's analysis suggests that the market price largely reflects this arbitration overhang, leading to their more optimistic stance.
"At current levels, Tata Power can be considered around Rs 368.30, with accumulation on dips up to Rs 360. The stock has the potential to move towards the first target of 398, followed by the second target of Rs 428 in the coming period," Choice Broking stated.
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