Monday is turning out to be a marvelous day of trading for the bulls on the D-Street as the frontline gauges Nifty50 and Sensex have rallied over 1%. The Nifty50 index is still about 600 points away from its all-time high which was registered in the month of December last year. However, the Nifty Central Public Sector Enterprises (Nifty CPSE) which comprises of 12 stocks has registered a fresh all-time high on Monday.
The Nifty CPSE index is trading up by 0.86% and the index has marked a fresh all-time high by moving in a staircase manner since March 2020 low. Recently, it has broken out of a 13-week flat base. For the last three weeks, it has been recording above-average volume. It has not developed any negative divergence on any timeframe, which is a positive factor. It is trading well above all key moving averages. The 10, 30, and 40-week averages are in an uptrend. The 30-week average is above the 40-week average and the 10-week average is above the 30-week average. This sequence of averages shows a strong uptrend in the stock.
The weekly 14 periods RSI (69.41) cleared the prior highs and is in a strong bullish zone. The MACD is also showing strong bullish momentum. The next meaningful target for the index is placed at 3251, which is a 127.6 % extension level. The medium-term target (3-6 months) is placed at 3473.
Fundamentally, the constituents of this sector are high dividend stocks. The institutions and the dividend-based mutual fund scheme use these as safe bets. Be with a positive bias as long as the trend continues. Any consolidation or a pullback is an opportunity to invest in these stocks as some of them offer good dividend yield and technical structure is strong.