ENERGY Sector Analysis – K Karthik Raja Rupeedesk Share Market Training- 01.03.2025
ENERGY Sector Analysis – K Karthik Raja Rupeedesk Share Market Training- 01.03.2025
ENERGY Sector Analysis – K Karthik Raja Rupeedesk Share Market Training- 01.03.2025
NIFTYENERGY Analysis
By K Karthik Raja
Key Factors Affecting & Reasons
1. Market Sentiment & Correction – The NIFTY Energy index has experienced a strong rally in recent years, but a sharp correction is evident, possibly due to profit booking, global economic concerns, or sector-specific issues.
2. Sector-Specific Trends – The energy sector is influenced by crude oil prices, government policies, and global energy demand. Any adverse developments in these areas can impact the index.
3. Macroeconomic Factors – Interest rate policies, inflation, and global geopolitical events could be contributing to the current correction phase.
4. Institutional Activity – Large-scale selling by institutional investors could be a reason for the high volume and declining price action.
Key Watch
- Support Levels – The index is testing its 200-day moving average (~29,019). A sustained break below this level could signal further downside.
- Volume Trends – The spike in volume suggests heavy participation. If volume increases on an upward move, it could indicate a reversal.
- Indicator Signals –
- RSI (Relative Strength Index) is at 28.66, indicating the market is oversold. A bounce could be possible.
- ADX (Average Directional Index) at 39.66 shows a strong trend, meaning the current downward move has momentum.
- MACD (Moving Average Convergence Divergence) is in negative territory, confirming bearish momentum.
Volume Analysis
- High Selling Pressure – A significant volume spike suggests strong selling.
- Institutional Outflow – Given the volume, it’s likely that institutional investors are adjusting their positions, possibly due to macroeconomic factors.
- Trend Confirmation – If the volume continues to rise with price falling, the bearish trend remains intact. A reversal would need confirmation through declining selling volume and higher buying volume.
Chart Analysis & Observations
- Long-term Uptrend Still Intact – Despite the correction, the broader trend remains bullish unless the price decisively breaks below long-term moving averages (200 MA & 390 MA).
- Testing Major Support – The index is near the 200-day moving average and psychological level of 30,000. A strong bounce could be expected if buyers step in.
- Bearish Momentum Strong – The MACD shows a downward trend, indicating selling pressure is still in control.
- RSI Oversold Zone – A reversal could be likely in the short term, but confirmation is needed.
Stocks to Watch
1. Reliance Industries (RIL) – Market leader in energy and oil refining, closely linked to the index’s movement.
2. ONGC (Oil & Natural Gas Corporation) – Heavily influenced by crude oil prices; watch for government policies.
3. Power Grid Corp – Defensive stock that may provide stability during corrections.
4. NTPC (National Thermal Power Corporation) – Beneficiary of increased power demand.
5. Adani Green & Tata Power – Renewable energy leaders; long-term growth prospects but short-term volatility.
Market Insights: Short-Term & Long-Term View
Short-Term View (1-3 Months):
- Market is oversold (RSI ~28), indicating a potential short-term bounce.
- Need confirmation from reversal signals such as MACD crossover or RSI moving above 30.
- Watch for a bounce near 200 MA (~29,019) or further downside if broken.
Long-Term View (1+ Year):
- The energy sector remains strong due to increasing power demand and government initiatives in renewable energy.
- As long as the index remains above 390 MA (~22,185), the long-term trend remains bullish.
- Any prolonged correction could be a good accumulation opportunity for long-term investors.
Conclusion
- The short-term trend is bearish, but the long-term trend remains bullish.
- The 30,000 level & 200 MA (29,019) are critical support zones; breaking below them could lead to further downside.
- Watch for reversal signals (RSI bouncing above 30, MACD crossover, increased buying volume).
- Long-term investors can accumulate quality stocks on dips in a staggered manner.
Disclaimer: Informational purposes only, not financial advice. Do your own research before making investment decisions.
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