In this month’s edition of ChartTalk, we delve into three high-potential stocks representing key sectors within the Indian market—NBFC, IT, and Financial Services—that are poised to deliver robust returns over the next year. Each selection is the result of thorough technical analysis, identifying companies with strong momentum, sound fundamentals, and sectoral tailwinds. As we break down the strategic positioning and growth prospects for each stock, we aim to provide insights that can help investors make well-informed decisions in the months ahead.

Technical Insights on a NBFC Stock: Resilience Amid Market Correction

This NBFC stock presents an appealing investment opportunity, especially in light of the recent market correction. While the Nifty Index has declined over 8% since its September highs, this stock has experienced a sharper pullback of nearly 15% but remains within a broad consolidation range, suggesting resilience despite market pressures.

 Technically, on the weekly chart, the stock price of Bajfinance previously reached an all-time high of ₹8050 in October 2021, followed by a correction phase that led it into a consolidation pattern. Since then, the price has been within an ascending triangle, a formation often indicative of a potential for upward movement. Over the past month, despite a 15% correction, the stock has maintained this ascending triangle pattern, signaling steady consolidation. The stock is taking support on the 200-week Moving Average (MA) and recently formed a Doji candlestick—a pattern known for signaling potential reversals—near this support, making the current levels attractive to buy.

On the daily chart, last week’s low took support on a trendline, with early signs of a rebound. This trendline support aligns with recent crossovers in the stock’s moving averages: one month ago, the 50-day MA crossed above the 100-day and 200-day MAs, reinforcing a bullish trend over both intermediate and long-term horizons. In addition, the Relative Strength Index (RSI) tested the oversold zone and has since begun moving toward a bullish territory, further validating the stock’s potential for recovery. This mix of strong support levels, bullish candlestick formations, and favorable moving average crossovers adds conviction to the bullish case for this stock.

For investors seeking entry, the recommended buy range lies between ₹6700 and ₹6800, with a price target of around ₹8100, offering an anticipated upside of approximately 19%. To manage risk, a stop-loss can be maintained at ₹6470. In conclusion, this NBFC stock’s consolidation within a strong technical pattern, along with key support indicators and bullish signals on multiple charts, suggests a compelling buying opportunity for those looking to capitalize on the current market conditions.

Bullish Breakout and Strong Momentum Signal Investment Potential

A leading IT stock has demonstrated impressive resilience and strength, outperforming both the IT sector index and the broader domestic market index. The stock’s consistent record highs highlight strong investor interest and a sustained bullish momentum.

On a weekly chart, Coforge recently broke above an upward-sloping trendline that had previously acted as resistance since 2022 ke 2022??. This breakout, following multiple failed attempts, indicates renewed buying interest and invites potential investment opportunities.

Following its peak of ₹6000 in July 2021, Coforge entered a corrective phase, finding key support above the 200-week Moving Average (MA) near ₹3220, where it established a base before gradually moving higher. The upward trend continued through the year, briefly encountering resistance near its previous high before retracing to the 200-week MA. However, in May this year, Coforge’s price structure strengthened, crossing above the 50-week and 100-week MAs. Last month, it achieved a substantial breakout above this long-standing resistance trendline, signaling a potential for further price appreciation.

This breakout on the weekly chart was accompanied by a notable increase in trading volume, underscoring the reliability of this upward movement.

On the daily chart, since forming a bottom near ₹4287 in May, Coforge has displayed a pattern of higher tops and higher bottoms, affirming a strong and sustained bullish trend. Last week, the stock re-tested the breakout level and resumed its uptrend, confirming ongoing momentum. During this re-test, it also took support on the 50-day MA, a technical reinforcement that aligns near-term, intermediate, and long-term trends positively.

Considering these technical factors, Coforge presents an attractive opportunity for investment. The recommended buying range is between ₹7600 – ₹7650, with a potential target of ₹8250, offering an approximate 8% upside. Investors are advised to maintain a stop-loss at ₹7185 to manage risk effectively. Coforge’s recent breakouts, increased volume, and supportive MA levels make it a favorable choice for investors seeking to benefit from a bullish trend in the IT sector.

A Bullish Case for Financial Services Stock as an Investment Opportunity

This leading financial services stock has shown notable resilience and strength, consistently outperforming the Nifty Index. This positive divergence from the broader market underscores strong investor sentiment and growing confidence in the stock’s potential.

Recently, on the weekly chart, MFSLachieved a significant technical milestone by breaking out from horizontal trendline resistance at approximately ₹1125, positioning it as an attractive buying opportunity for investors. After initially reaching a high of ₹1148 in July 2021, the stock entered a corrective phase, eventually stabilizing and forming a base of around ₹610 in May 2023. This bottoming phase laid a foundation for the stock’s gradual recovery, marked by a series of higher tops and higher bottoms, a classical indication of a strong bullish trend.

As the stock rebounded on the daily chart, it crossed above key moving averages—namely the 50-day, 100-day, and 200-day MAs—further solidifying the bullish undertone. Last month, the stock faced resistance near its prior highs but ultimately succeeded in breaking out, signaling renewed momentum.

This month, MFSL re-tested the breakout level, affirming the breakout’s validity, and resumed its upward movement. This re-test at the breakout level, followed by a continuation of the uptrend, is typically a robust technical confirmation of strength, making it an ideal setup for investors. Furthermore, the breakout was supported by an exceptional increase in volume, lending credibility to the upward move. The Relative Strength Index (RSI) also made a decisive breakout from a downward-sloping trendline, adding to the stock’s bullish outlook and signaling increasing buying interest.

In the past few trading sessions, MFSLhas been consolidating at higher levels, exhibiting strong price resilience. Last week, it broke out from this consolidation range, which added further momentum to the bullish trend. Additionally, the Parabolic SAR (PSAR) remains in a buy mode, reinforcing the buy signal across different time frames and confirming the ongoing positive trend.

Considering these strong technical indicators, MFSL presents a compelling buying opportunity. The recommended buy range is between ₹1220 and ₹1250, with a strict stop-loss at ₹1170 to manage risk effectively. A potential price target near ₹1400 offers a solid upside potential, making this stock a favorable choice for investors seeking to capitalize on momentum in the financial services sector. With the breakout confirmation, volume increase, and supportive indicators like RSI and PSAR, MFSL is well-positioned for further gains.

Foram Chheda, CMT