Choice Broking’s Sachin Gupta identifies three potential reversal candidates as Indian equities rebound in October, but technical confirmation and crude oil risks remain crucial

Indian equity markets have staged a recovery in October after facing pressure over the previous two months, prompting technical analysts to identify stocks that may be approaching a potential trend reversal. Havells India, NTPC and Birlasoft are among the stocks attracting attention, with their price patterns showing early signs of stabilisation or improving momentum.

Sachin Gupta, Vice President–Research at Choice Broking, has identified the three stocks as potential reversal candidates based on their technical charts. Birlasoft and Havells India have gained approximately 18% and 12%, respectively, during October, while NTPC has declined around 5% over the same period, according to the market data cited in the report.

The setups, however, are not identical. Birlasoft is showing signs of a breakout from a falling wedge pattern, Havells India has recovered from a long-term support zone but remains below key weekly moving averages, and NTPC is trading near its 200-week exponential moving average (EMA). Each stock has distinct support levels, resistance zones and risks that investors should evaluate before drawing conclusions about a sustained reversal.

October Market Recovery Brings Technical Opportunities Into Focus

The Nifty and Nifty 500 have reversed their two-month losing streak in October, gaining approximately 2% and 0.6%, respectively, according to the figures cited in the report. The recovery has been supported by better-than-expected quarterly earnings from major information technology companies and select banks.

Large-cap stocks have also outperformed mid-cap and small-cap shares, a trend that Geojit Investments Chief Investment Strategist V K Vijayakumar considers rational and potentially sustainable. Strong earnings from established companies can provide greater support to market valuations during uncertain periods, although performance may vary significantly across sectors.

IT shares have been among the stronger performers within the Nifty 500 during the month. Tata Elxsi, for instance, had gained nearly 25% in October at the time of the report.

However, the market recovery faces a significant external risk from elevated crude oil prices. Tensions around the Strait of Hormuz and Brent crude near $109 per barrel have raised concerns about energy costs, inflation and investor sentiment. A renewed surge in oil prices could undermine the broader market rebound, even if individual stocks display encouraging chart patterns.

Against this backdrop, the technical setups in Birlasoft, Havells India and NTPC merit attention, but any potential recovery needs to be assessed alongside broader market conditions.

Birlasoft: Falling Wedge Breakout Signals Improving Momentum

Reported market price: approximately ₹316

Birlasoft has shown a strong recovery during October after finding support in the ₹266–₹270 range. According to Sachin Gupta, this zone coincided with the lower Bollinger Band, a technical indicator commonly used to assess price volatility and identify areas where a stock may be experiencing unusually weak or strong momentum.

The stock's weekly chart has also shown a breakout from a falling wedge pattern, accompanied by healthy trading volume. A falling wedge typically develops when prices move within converging downward-sloping trendlines. A breakout above the pattern can indicate that selling pressure is weakening and buyers are gaining control, although the signal requires confirmation.

Another positive development is that Birlasoft has moved above its 20-week EMA. This suggests an improvement in its intermediate-term price structure, though it does not independently confirm a long-term reversal.

Key levels to watch in Birlasoft

Gupta has identified ₹330 as an important level for the next phase of the stock's movement. A sustained move above this threshold could open the possibility of an advance towards ₹360–₹400.

On the downside, the ₹266 level remains a crucial support zone. A fall towards or below this area would weaken the recovery setup and raise questions about the durability of the recent buying interest.

The key factor is whether Birlasoft can hold its gains and establish a sustained move above ₹330, rather than merely recording a short-lived breakout.

What could influence the stock?

As an IT services company, Birlasoft's performance is influenced by client spending, technology budgets, deal wins, revenue growth, margins and demand across its end markets. Even a constructive chart pattern can fail if earnings expectations deteriorate or the broader IT sector weakens.

Investors should therefore combine the technical setup with the company's operating performance and valuation rather than treating the breakout as a standalone investment signal.

Havells India: Recovery From Support, but Long-Term Trend Remains Weak

Reported market price: approximately ₹1,108

Havells India has rebounded from the ₹1,000–₹1,020 zone, which Sachin Gupta identifies as an important historical support area. The zone previously acted as a base in December 2022, and the recent recovery suggests that buyers have returned around a price level that market participants may consider significant.

The stock has also moved above the 61.8% Fibonacci retracement level at ₹1,082.10. Fibonacci retracement levels are commonly used by technical analysts to identify potential resistance or support during a price recovery following a decline.

Moving above this level indicates an improvement in the stock's recent price structure. However, the analyst has cautioned that the broader weekly trend remains weak because Havells India continues to trade below its 50-week and 200-week EMAs.

These moving averages were placed at approximately ₹1,265 and ₹1,358, respectively, in the analysis. They represent important levels to monitor as the stock attempts to build on its recovery.

Key levels to watch in Havells India

A sustained move above ₹1,265 could strengthen the recovery and open the way towards the ₹1,300–₹1,360 range. Such a move would also help the stock challenge its longer-term trend indicators.

On the downside, ₹1,015 is a critical support level. A decisive break below this zone could weaken the recovery and expose the stock to a possible decline towards ₹850, according to the analyst's assessment.

The difference between a rebound and a genuine trend reversal is important here. A bounce from support can attract short-term buying, but a sustained move above key moving averages would provide stronger evidence that the longer-term price trend is improving.

What could influence the stock?

Havells India operates across electrical equipment and consumer-facing product categories, including cables, wires, switchgear, lighting and appliances. Its performance can be affected by housing demand, construction activity, infrastructure spending, input costs and consumer discretionary demand.

A sustained improvement in these underlying business drivers could support investor confidence. However, the technical recovery should be evaluated alongside earnings growth, margins and valuation before making investment decisions.

NTPC: Long-Term Support at the 200-Week EMA in Focus

Reported market price: approximately ₹314

NTPC is showing early signs of a possible reversal after declining around 5% during October, according to the figures cited in the report. Sachin Gupta notes that the stock is trading near its 200-week EMA at approximately ₹307, a long-term technical indicator frequently monitored by market participants.

The 200-week EMA gives greater weight to recent prices while measuring the stock's longer-term trend. When a stock approaches this indicator after a decline, analysts often watch for signs of stabilisation or renewed buying interest.

Gupta has also highlighted an improvement in the relative strength index (RSI), which has recovered from oversold territory to approximately 34. The RSI is a momentum indicator that helps assess the speed and magnitude of recent price movements. Readings below 30 are commonly interpreted as oversold, although such readings do not guarantee an immediate recovery.

Support near the lower Bollinger Band and healthy trading volume at lower price levels have also been cited as signs that buying interest may be emerging.

Key levels to watch in NTPC

The immediate support level identified by Gupta is ₹296. If the stock holds above this level and buying momentum improves, it could attempt an advance towards ₹340 and subsequently ₹360 in the short to medium term.

However, a sustained move above immediate resistance levels is necessary to strengthen the reversal case. Merely trading near the 200-week EMA or recovering from oversold conditions does not establish that a new uptrend has begun.

A decisive breakdown below support would weaken the technical outlook and suggest that selling pressure remains dominant.

What could influence the stock?

NTPC's outlook is linked to electricity demand, capacity additions, project execution, fuel availability, regulatory developments and the economics of its thermal and renewable energy businesses.

As a major power producer, the company may benefit from rising electricity demand and expansion in generation capacity. At the same time, capital expenditure requirements, project timelines, fuel costs and regulatory factors can affect returns.

Investors should assess the company's operating performance and long-term growth plans alongside the technical support levels identified by the analyst.

Comparing the Three Technical Setups

The three stocks represent different stages of a possible recovery, according to the cited technical analysis.

Birlasoft has the clearest breakout-oriented setup, with a falling wedge breakout and a move above the 20-week EMA. The ₹330 level is the next important hurdle, while ₹266 is a major support zone.

Havells India has rebounded from historical support and moved above a key Fibonacci retracement level. However, the stock remains below its 50-week and 200-week EMAs, making the ₹1,265 level important for assessing whether the recovery can extend.

NTPC is trading near its long-term 200-week EMA around ₹307. Improving RSI momentum and buying interest at lower levels offer early signs of stabilisation, but the stock needs to hold ₹296 and move above resistance levels to strengthen the reversal case.

These distinctions matter because a technical breakout, a recovery from historical support and a test of a long-term moving average are not interchangeable signals. Each requires separate confirmation and risk assessment.

Why Trend Reversals Need Confirmation

Technical reversals can offer opportunities, but they can also fail when market conditions change or buying interest proves temporary. Investors should distinguish between an early reversal signal and a confirmed change in the prevailing trend.

Several indicators can help assess the strength of a potential reversal:

• Price confirmation: The stock should sustain its move above the relevant breakout or resistance level rather than briefly cross it.

• Trading volume: Rising volume during an advance can provide additional evidence of buying participation.

• Momentum indicators: Improvements in RSI and other momentum measures can support the case for recovery, but should not be used in isolation.

• Support preservation: The stock should remain above the key support level identified in the analysis.

• Fundamental performance: Earnings, business outlook, debt, cash flows and valuation should support the investment thesis.

Investors should also consider position sizing and downside risk, particularly when a stock has already rallied sharply or remains below its long-term moving averages.

Market Outlook

The October recovery has brought Havells India, NTPC and Birlasoft into focus as potential technical reversal candidates. Birlasoft is showing a falling wedge breakout, Havells India has recovered from an important historical support zone, and NTPC is testing its long-term 200-week EMA.

The technical outlook will depend on whether these stocks sustain their respective support levels and overcome key resistance zones. For Birlasoft, the ₹330 level is important; for Havells India, the ₹1,265 area is a key hurdle; and for NTPC, holding ₹296 while moving above immediate resistance would strengthen the recovery case.

At the broader market level, strong quarterly earnings and improving momentum have supported the October rebound. Nevertheless, elevated crude oil prices and geopolitical tensions around the Strait of Hormuz remain potential headwinds for equities.

Investors should treat the identified levels as technical reference points rather than assured targets. A sustainable reversal requires confirmation from price action, trading volume and company fundamentals. The most prudent approach is to evaluate each stock independently, account for downside risks and avoid assuming that an early recovery signal guarantees a lasting uptrend.