What should traders do with this small-cap power stock?

TD Power Systems has surged over 4% despite strong weakness in the market. 

The sentiment in the market is extremely poor as benchmark indices experience weakness for seventh consecutive day. However, stock specific action continues to be seen in fundamentally good quality stocks amid strong buying interest. One such stock is TD Power Systems (NSE Code - TDPOWERSYS) which has soared over 4% and is one of the trending stock on the bourses today.

In its recent quarterly results, revenue grew 14% YoY to Rs 205 crore while net profit jumped to Rs 20 crore in Q3FY23. The company management expects robust demand for its products and electrical solutions. Technically, the stock is trading near its 8-week cup pattern with good volumes. The last 2 days have recorded above average volumes which were greater than 30-day average volume. Moreover, the technical parameters such as the 14-period daily RSI (69.09) lies in the bullish territory and indicates strong strength in the stock. The OBV is rising and demonstrates larger participation level in the stock.  The trend indicator ADX (22.84) is trending upward and shows rising trend strength. The stock currently trades above all its key moving averages and meets Guppy’s GMMA criteria. The Elder Impulse system has formed consecutive bullish candles and shows strong bullishness. The Relative Strength (RS) is above zero and indicates outperformance of the stock against the broader market.

The medium term resistance for the stock lies at Rs 150 level, followed by Rs 160 level. Immediate support lies at Rs 130 level. Considering the bullish technical setup, the stock is expected to see a stronger upside in times to come. Currently, the shares of TDPOWERSYS trade at Rs 146 level on NSE. Momentum traders can keep a close watch on this stock in upcoming trading sessions.

TD Power Systems is a Rs 2200 crore market cap company, primarily engaged in the manufacturing of AC Generators with products in the output range of 1 MW to 200 MW used for steam turbines, gas turbines, diesel engines, and allied applications. The company focuses on manufacturing custom-designed generators of higher efficiencies for its customers.