The market undergoes sector rotation with no one noticing. No sound. No headlines. Just a steady buildup. It looks like the CPSE pack is taking on that role now.
Many investors remember PSU stocks for their long periods of stability and sudden, sharp rises. But experienced chart readers know these stocks tend to move with conviction when they wake up.
The way the Nifty CPSE Index is set up right now makes it look like we might be entering one of these phases, which could mean a 20% rise in the next few months.
CPSE stocks, on the other hand, move in cycles, unlike high-beta private sector stocks. They consolidate patiently, build strong bases, and then trend in a clear direction. From a technical point of view, they are now sending out signals that can’t be ignored.
Weekly Heikin Ashi: The Signal to Start the Trend Again
On the weekly time frame, we see a series of bullish Heikin Ashi candles forming above the level where the price broke out earlier.
When we look at Heikin Ashi candles on the chart, a breakout from a period of stability is followed by a series of bullish Heikin Ashi candles, indicating a strong bullish trend because the candle’s body gets bigger, signifying the trend’s restart after a healthy pullback.
Breakouts in the market are often fake. But they don’t often fake consecutive bullish Heikin Ashi candles above the breakout zone.
The 162 Trading Day Magic of the Fibonacci Time Cycle
Now it’s time for the part that most traders forget about. The price is only part of the story. Time finishes the equation.
According to the Fibonacci Time Cycle theory, the recent consolidation phase lasted 162 trading days before the breakout happened and 162 is not a random number. It is called the Golden Ratio as per Fibonacci theory.
A breakout that happens close to a Fibonacci time completion usually means:
- The maturity of consolidation
- The end of selling pressure
- Change in the trend’s structure
The market has fully absorbed previous gains, as shown by the 162-trading day consolidation. Trader with weak hands shake out. Hands that are strong build up.
Price correction and time correction are both very strong. When both of these things line up, the move is likely to last.
Breakouts that happen around Fibonacci time clusters tend to lead to longer moves in one direction instead of short-lived spikes when you look at the past. This makes the bullish case stronger.
Point & Figure: Bullish Catapult Multiples Conviction
When we switch to the Point & Figure chart, which takes out time noise and only looks at price action, we see a “Bullish Catapult breakout.”
If you don’t know what a Bullish Catapult is, it happens when:
1. The price breaks out of a double top
2. Pulls back a little
3. And then it breaks out again above the previous high.
This pattern shows that supply has been absorbed and demand has risen again. In short, buyers tried once, met with resistance, regrouped, and then broke through for good.
The Bullish Catapult is not a weak signal. It is a strong pattern. It looks like the retracement was just a break, not a change.
When this pattern shows up after a Fibonacci time completion and with bullish Heikin Ashi confirmation, the chances of it happening go up a lot.
Scorecard with multiple charts and timeframes
We used a structured scoring model instead of just one charting style. We looked at 5 charting methods and 3 different time frames.
They assign a score of 1 to the bullish trend and 0 to the bearish trend. This is the objective way to identify the trend.
Stock Leadership in the CPSE Basket
The leaders of an index move make it strong for the index. Based on the above scoring methods, we analysed the constituents of the Nifty CPSE.
Right now, NTPC and ONGC are at the top of the relative strength table for CPSEs. These two big names have both weight and sentiment.
Right behind them are:
Power Grid Corporation of India
The fact that energy, power transmission, and defence names are at the top suggests that a lot of traders are involved in a lot of different themes, not just a few. Rallies last longer when there are different kinds of leaders.
Disclaimer:
Note: The purpose of this article is only to share interesting charts, data points and thought-provoking opinions. It is NOT a recommendation. If you wish to consider an investment, you are strongly advised to consult your advisor. This article is strictly for educative purposes only.
Brijesh Bhatia is an Independent Research Analyst and is engaged in offering research and recommendation services with SEBI RA Number – INH000022075. He has two decades of experience in India’s financial markets as a trader and technical analyst.
Disclosure: The writer and his dependents do not hold the stocks discussed here.
The website managers, its employee(s), and contributors/writers/authors of articles have or may have an outstanding buy or sell position or holding in the securities, options on securities or other related investments of issuers and/or companies discussed therein. The content of the articles and the interpretation of data are solely the personal views of the contributors/ writers/authors. Investors must make their own investment decisions based on their specific objectives and resources, and only after consulting such independent advisors if necessary.