One sector, three breakout stocks. Can you take the bull by the horns?
Subscribe to enjoy similar stories. While the market is trending bullish, sector rotation is keeping traders on their toes as they look to catch high-flying stocks. But rather than chasing the latest movers, I believe in trading the trend—a strategy that can offer low-risk, high-reward opportunities.
One sector that stands out amid this bullish momentum is digital. In this article, I will walk you through the chart setup of the Nifty India Digital Index and examine three stocks from the index that are breaking out with solid technical setups. The Nifty India Digital Index tracks companies at the forefront of India’s digital transformation.
It reflects the rapid growth of India’s digital economy, encompassing everything from IT services providers to tech innovators and telecom giants. On the 0.25% X 3 daily point & figure (P&F) chart, this index has a history of long consolidation phases followed by powerful breakouts. These breakouts tend to occur every few years, providing good entry points for investors.
This year saw a significant breakout from a third consolidation phase, with an anchor column (circled in green) symbolising a robust bullish trend. Before the recent breakout, the index had formed a ‘bear trap’ pattern—a bullish signal in P&F charting. This false breakdown traps sellers and is typically followed by strong upward momentum.
The most recent move has validated this pattern, signalling a bullish breakout. Here are three constituents of this index that are breaking out on the charts. Tata Consultancy Services, one of the world’s largest IT service providers, has played a pivotal role in India's digital transformation.
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