Supreme Power Equipment: Technically Strong, Chart of the MonthNSE:SUPREMEPWR Technically Strong Momentum is my pick in this month's "Chart of the Month"
Price Action Analsis:
- Stock currently trading at ₹227.50, up 21.35 (+10.36%), showing strong bullish momentum
- Recent breakout from a prolonged Correction phase that lasted from July 2024 to May 2025
- Price has successfully cleared multiple resistance levels and is now approaching previous highs
- Strong recovery from the March 2025 lows around ₹95-100 levels
Volume Spread Analysis:
- Current volume at 324.68K shares, significantly higher than the 20-day average
- Volume spike during the recent breakout confirms institutional participation
- Volume pattern shows accumulation during the consolidation phase
- Strong volume support during the current upward move validates the breakout
Key Technical Levels:
Support Levels:
- Immediate support: ₹210-215 (recent breakout level)
- Secondary support: ₹190-195 (previous resistance turned support)
- Major support: ₹160-170 (consolidation zone)
- Critical support: ₹120-130 (long-term moving average zone)
Resistance Levels:
- Immediate resistance: ₹240-250 (previous high zone)
- Major resistance: ₹280-290 (historical resistance)
- Ultimate target: ₹350-370 (measured move from base)
Base Formation:
- Clear accumulation base formed between ₹120-250 from July 2024 to May 2025
- Base depth of approximately 130 points provides a strong foundation
- Base duration of 10+ months indicates strong institutional accumulation
- Recent breakout from this base suggests potential for significant upward move
Technical Patterns:
- The cup and Handle pattern formation is visible on the monthly timeframe
- The ascending triangle breakout pattern recently completed
- Moving average convergence suggesting trend reversal
- RSI is likely showing bullish divergence from the March lows
Trade Setup:
Entry Strategy:
- Primary entry: ₹225-230 on any pullback to the breakout level
- Aggressive entry: Current market price ₹227.50 for momentum traders
- Conservative entry: Wait for retest of ₹210-215 support zone
- Scale-in approach: 50% at current levels, 50% on any dip to ₹215
Exit Levels:
- Target 1: ₹280 (24% upside) - Previous resistance zone
- Target 2: ₹320 (41% upside) - Measured move target
- Target 3: ₹370 (63% upside) - Ultimate breakout target
- Trailing stop: Use a 10% trailing stop once Target 1 is achieved
Stop-Loss:
- Initial stop-loss: ₹195 (14% downside risk)
- Breakeven stop: Move to ₹230 once price reaches ₹260
- Trailing stop: 8-10% below recent swing high
Position Sizing:
- Conservative investors: 2-3% of portfolio
- Moderate risk tolerance: 3-5% of portfolio
- Aggressive traders: 5-7% of portfolio (with tight stops)
- Maximum exposure: Not more than 7% given single stock concentration risk
Risk Management:
- Risk-reward ratio: 1:2 minimum for all positions
- Never risk more than 2% of the total portfolio on this single trade
- Use position sizing calculators to determine the exact share quantity
- Consider partial profit booking at each target level
- Monitor sector rotation and overall market conditions
Sectoral Backdrop:
Power Equipment Sector Overview:
- India's power sector is undergoing a massive transformation with a renewable energy push
- The government's target of 500 GW of renewable capacity by 2030 is driving equipment demand
- Infrastructure spending and rural electrification programs supporting sector growth
- PLI scheme for manufacturing provides additional tailwinds
Sector Challenges:
- Raw material cost inflation is impacting margins
- Supply chain disruptions affecting delivery timelines
- Intense competition from Chinese manufacturers
- Regulatory changes and policy uncertainties
Sector Opportunities:
- Make in India initiative favours domestic manufacturers
- Rising power demand from industrial and commercial sectors
- Smart grid implementation creating new revenue streams
- Export opportunities in emerging markets
Fundamental Backdrop:
Company Strengths:
- Established player in power transmission and distribution equipment
- Strong order book providing revenue visibility
- Diversified product portfolio, reducing concentration risk
- Experienced management team with industry expertise
Financial Health:
- Need to verify recent quarterly results for revenue and profit trends
- Debt levels and interest coverage ratios require monitoring
- Cash flow generation capability is important for sustained growth
- Return on equity and asset turnover metrics need evaluation
Growth Catalysts:
- Government infrastructure spending on the power sector
- Rural electrification and grid modernization projects
- Renewable energy integration requires specialized equipment
- Potential for export market expansion
Risk Factors:
- Dependence on government orders and policy changes
- Working capital-intensive business model
- Competition from larger players and imports
- Raw material price volatility affecting margins
My Take:
NSE:SUPREMEPWR exhibits a strong technical setup, characterised by a clear breakout from a well-formed base. The combination of volume confirmation, sector tailwinds, and government policy support creates a favourable risk-reward scenario. However, traders should maintain disciplined risk management and avoid overexposure to this single position.
Honourable Mentions:
Other stocks that have a good Setup
NSE:KIRLOSBROS , NSE:CGCL , NSE:SUNDRMFAST
Keep in the Watchlist.
NO RECO. For Buy/Sell.
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Disclaimer: "I am not a SEBI REGISTERED RESEARCH ANALYST AND INVESTMENT ADVISER."
This analysis is intended solely for informational and educational purposes and should not be interpreted as financial advice. It is advisable to consult a qualified financial advisor or conduct thorough research before making investment decisions.
