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A Breakout May Be in the Offing in This Engineering Stock

The Indian equities have been quite jittery over the past couple of weeks. Broadly speaking, the headline index NIFTY50 ($NIFTY) has been oscillating between its 50-day moving average (MA) and 200-day MA during February. These MAs are placed at 17885 and 17302 respectively. Lately, the index has made strong attempts to hold the 200-day MA as a support on a closing basis. Despite some intermittent violations of this important level, it is crucial that NIFTY holds this support on a closing basis.

Meanwhile, this Indian engineering multinational which is providing sustainable solutions in the areas of energy and the environment is showing a strong technical setup and hints at a likely upward revision of price over the coming days.


From the lows that were formed near 700 levels in the last quarter of 2020, THERMAX had a great run; the rally that followed saw the stock returning over 286% from those levels. It marked its high at 2607 in September 2022. The recent price action shows that the stock may be in for some resumption of the up-move again.

After the stock peaked just above the 2600 level in September, the stock witnessed a corrective downtrend. The retracement that followed saw the stock slipping below its 200-day MA. After struggling to keep its head above this point, the stock recovered. However, this recovery halted at 2400 where the stock formed its lower top. The stock has grossly underperformed the broader markets after that, it stayed under corrective decline, and has made a strong attempt to form a base near 1830 levels.

The most recent price action shows the stock trying to stage a reversal after putting a potential bottom in place between 1830 and 2000 levels. It has also crossed above the 50-day MA and 200-day MA; they currently stand at 2000 and 2107 respectively.

The stock is seen consolidating just below the 2160 level; any convincing move above this point is likely to see a meaningful appreciation in the price.

The relative strength index (RSI) is neutral and doesn’t show any divergence against the price. The weekly RSI is seen breaking out from a formation and moving higher. The moving average convergence/divergence (MACD) is above the signal line and stays in continuing buy mode. The relative strength (RS) line against the broader NIFTY500 index is seen moving higher on the daily and weekly timeframes; it has also crossed above its 50-period MA.

Importantly, while the stock consolidates below the resistance point of 2160, the on balance volume (OBV) has already surpassed its previous most immediate high point. This confirms the participation of volumes in the move and also hints at accumulation in the stock at current levels.

If the resolution of this technical setup occurs on the expected lines, the stock may go on to test 2350-2375 levels over the coming days. This would translate into potential returns of ~9.50% from the current levels. Any close below 2000 would negate this technical setup and view.

Foram Chheda, CMT 


Milan Vaishnav, CMT, MSTA | Consulting Technical Analyst | |

Disclosure pursuant to Clause 19 of SEBI (Research Analysts) Regulations 2014: The analyst, Family Members, or his Associates holds no financial interest below 1% or higher than 1% and has not received any compensation from the Companies discussed.

The securities discussed and opinions expressed in this report may not be suitable for all investors, who must make their own investment decisions, based on their own investment objectives, financial positions, and the needs of specific recipients. This may not be taken in substitution for the exercise of independent judgment by any recipient. 

The recipient should independently evaluate the investment risks. The value and return on investment may vary because of changes in interest rates, foreign exchange rates, or any other reason. Past performance is not necessarily a guide to future performance. The usage of the Research Reports and other Services are governed as per the Terms of Service at

The Research Analyst has not managed or co-managed the issues of any of the companies discussed and has not received any such remuneration from such activities from the companies discussed.

The Research Analyst has not received any remuneration from the Merchant Banking activities.

The Research Analyst has adopted an independent approach without any conflict from anyone. The Research Analyst has not received any compensation or other benefits from the companies mentioned in the report or third parties in connection with the preparation of the research report.

Compensation of the Research Analysts is not based on any specific merchant banking, investment banking, or brokerage service transactions.

The Research Analyst is not engaged in a market-making activity for the companies mentioned in the report.

The Research Analyst submits that no material disciplinary action has been taken on him by any Regulatory Authority impacting Equity Research Analysis activities.

This report is not directed or intended for distribution to, or use by, any person or entity who is a citizen or resident of or located in any locality, state, country, or other jurisdiction, where such distribution, publication, availability, or use would be contrary to law, regulation or which would subject the Research Analyst to any registration or licensing requirement within such jurisdiction.

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