Is this a good time to buy IREDA?

The Exhilarating Ascent: A Meteoric Rise and Sudden Fall

In the not-so-distant past, the buzz on Dalal Street was all about a freshly listed PSU stock that seemed to be reaching new heights at an astonishing pace. The Indian Renewable Energy Development Agency Ltd (IREDA) made quite an entrance, debuting at Rs 50, well above its issue price of Rs 32. The excitement reached its peak when the stock surged to an impressive high of Rs 123.20 on the NSE. Yet, as the saying goes, every good thing must come to an end, and so did the exhilarating rally of IREDA.

Navigating the Correction: Technical Insights and Support Levels

After a relentless upward trajectory, the stock faced a correction of just over 18% in the subsequent eight trading sessions, currently hovering around the Rs 100.50 mark. In this write-up, we delve into the technical aspects to decipher the future path of this intriguing stock.

From its all-time high of Rs 123.20 on December 14, IREDA corrected approximately 38.2%, retracing the up-move from Rs 61.50 to Rs 123.20. What adds a layer of intrigue is the gradual retracement – a 6-day rally resulting in a 100% up-move has retraced only 38.2% over 8 trading sessions. Immediate support rests around Rs 98.30-99, while a more significant medium-term support zone lies between Rs 85 and Rs 92.35. This area includes a confluence opening upside gap from December 12, 21-day Exponential Moving Average (DEMA), and 50 to 61.8% retracement of the up-move.

Weekly Trends and Market Dynamics: A Closer Look

Examining the weekly chart, IREDA finds itself trading within the range of the candlestick from the weekend of December 15. Typically, after a robust up-move, stocks undergo a consolidation phase for the next few weeks to alleviate overbought conditions. The recent price correction can be viewed as a routine adjustment, supported by low volumes and a gradual pace of retracement.

Strategic Entry Points: Navigating the Momentum and Risk-Reward Ratios

Looking forward, the stock’s sustainability above the 5-day Exponential Moving Average (EMA) at Rs 104.48 is crucial for momentum buyers. However, for those seeking an entry point with an attractive risk-reward ratio, the Rs 85-92.35 range appears opportune. As the rollercoaster ride of IREDA continues, astute investors may find this juncture a compelling time to accumulate shares and ride the waves of market dynamics.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.