As large-cap stocks and sectorial indices are gaining bullish momentum, the Nifty Midcap index is on the verge of breaking out of its consolidation zone.
As large-cap stocks and sectorial indices are gaining bullish momentum, the Nifty Midcap index is on the verge of breaking out of its consolidation zone.
It could join hands with the benchmark indices to surpass its previous high.
During the September 2022 rally, the midcap index outperformed Nifty and hit a new high, indicating a trend reversal.
In the recent rally, Sensex and Nifty have crossed their previous highs but the momentum is lacking in the midcap index.
As the midcap index hit a higher high in September 2022, the recent momentum may catch up with the benchmark index. This offers traders a good opportunity in mid-cap stocks.
The surpassing of the previous swing high (lower black horizontal line on chart) signals the bulls are gaining strength. The break of the higher horizontal trendline on the chart above may accelerate the bullish trend.
Don't miss this opportunity with a favourable low risk - high reward setup.
The broader market is trending bullish. So let's analyse the performance of the Midcap Index against the Nifty500.
This is the ratio chart is of Midcap100 / Nifty500. If the ratio is going higher, it means midcaps are outperforming against Nifty500 and vice versa.
In the chart above, the ratio broke out of a bullish pennant technical pattern in August 2022. The bullish pennant pattern is formed with a rally prior to the consolidation in the form of a symmetrical triangle.
The rally is considered as the pole and added with a symmetrical triangle forms the bullish pennant. It's a continuous pattern indicating the resumption of the bullish trend.
The breakout is retested in October and the resumption of the northwards journey in November suggests it's time to buy midcap stocks.
We have shortlisted 5 potential multibagger midcap stocks which are technically in a bullish trend.
Dear readers, kindly note these are not recommendations. They are stocks which have an excellent setup on charts.
You should keep these stocks on your watchlist and do due diligence before investing.
Let's get started…
#1 National Aluminium (NALCO)
Incorporated in 1981, National Aluminium Company, abbreviated as NALCO, is a government company that operates in mining, metals, and power. It's under the ownership of the ministry of mines, government of India.
It's the country's largest integrated bauxite-alumina-aluminium-power complex, with bauxite mining, alumina refining, aluminium smelting, and casting.
NALCO is currently trading at Rs 72, way below its 52-week high of Rs 133 touched on 4 March 2022.
#2 REC Ltd
REC is the public infrastructure finance company in India. It's a public sector undertaking (PSU). The company is engaged in the financing and promotion of transmission and distribution projects throughout India.
Its main objective is to finance and promote rural electrification projects all over the country.
REC is currently trading at Rs 99. Its 52-week high of Rs 116 touched on 10 November 2021.
#3 IRFC
Indian Railway Finance Corporation (IRFC) is the financing arm of the Indian Railways, government of India. It's under the ministry of railways (MoR).
The company's business is to borrow funds from the financial markets to finance the acquisition/creation of assets which are then leased out to the Indian Railways.
IRFC currently trades at Rs 24, close to its 52-week high of Rs 25.45.
#4 BHEL
Bharat Heavy Electricals (BHEL) is an integrated power plant equipment manufacturer. It's engaged in design, engineering, manufacture, erection, testing, commissioning, and servicing of a wide range of electrical products.
The company caters to core sectors of the economy. It's the flagship engineering and manufacturing company of India owned and controlled by the government.
BHEL currently trades at Rs 76, very close to its 52-week high of Rs 77.40 touched on 4 November 2022.
#5 Bank of India
Bank of India shares are in focus of late after the bank posted good quarterly results. The bank reported its best asset quality performance in seven years.
Further, the bank is expecting credit cycle to improve going forward and expects steady loan growth this year.
Bank of India currently trades at Rs 73.55. It hit a 52-week high of Rs 77.9 yesterday.
So there you go…a list of potential midcap multibagger stocks for 2023 to keep on your watchlist.
If you're interested in being part of my charting journey as I share how to create wealth from the profitable trade setups, join my telegram channel – Fast Profits Daily.
Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such.
This article is syndicated from Equitymaster.com.
(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)
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