Query Corner: Pidilite Industries testing key resistance level

Kindly advise me on the prospects of holding AstraZeneca Pharma bought at Rs 852.5?

Gopalakrishnan S

AstraZeneca Pharma India (Rs 829.7): The stock has been on a long-term downtrend ever since its all-time high at Rs 2,649 marked in April 2012. Nevertheless, the stock found support at around Rs 635 in March this year and started to move sideways. Since then, the stock has been on a medium-term sideways consolidation phase in a broad range between Rs 635 and Rs 900.

Investors with long-term perspective can hold the stock with stop-loss at Rs 620. A decisive fall below the lower band at Rs 635 will strengthen the stock’s long-term downtrend and drag it lower to Rs 560 and Rs 500.

However, as the stock has been testing its upper boundary at Rs 900 in the past one month, we are positively biased towards an upward breakout. In that scenario, the stock can trend northwards to Rs 1,000 and Rs 1,135 in the medium-term. Next key resistances are pegged at Rs 1,200 and Rs 1,320. Inability to rally above these resistances will be cue for taking profits off the table.

I would like to know the prospect of MRF and Pidilite Industries. Can I buy these stocks at current levels?

G. Pavan Kumar, N.Raman, D.Pravin

MRF (Rs 12,991.5): MRF has been on a long-term uptrend since bottoming out in early 2009 at Rs 1,501. But, after registering a new high at Rs 15,499 in May this year, the stock started to decline. Medium-term trend has been down from its new high. The stock is currently testing significant support at around Rs 12,500.

An emphatic dive below this support will reinforce the bearish momentum and pull the stock down to Rs 11500 which is an important long-term support level. Subsequent support is at Rs 11,000.

A further decline below the key support level of Rs 11,000 will pave way for a downward move to the next base at Rs 10,000. Investors can look to buy at this level.

Conversely, a conclusive move above its immediate resistance at Rs 13,800 can push the stock higher to Rs 14,500 and then to Rs 15,500 in the medium-term.

Pidilite Industries (Rs 250.5): This stock also has been in a long-term uptrend since its early 2009 low of Rs 40.

After retracing almost 50 per cent fibonacci retracement level of the stock’s previous up leg, the stock found support at around Rs 220 in late August this year and bounced back. At present, the stock is testing its 200-day moving average and important resistance band between Rs 250 and Rs 260. Medium-term investors can accumulate the stock with stop-loss at Rs 215. Strong rally above Rs 260 can push the stock higher to Rs 290 and Rs 300 zone. Nevertheless, a decisive fall below the stock’s key support at Rs 220 can pull the stock down to Rs 200.

Next significant long-term supports are at Rs 180 and Rs 160.

Please let me know the prospect of Karur Vysya Bank purchased at Rs 450 from short-term perspective.

R. Laxmanan.

Karur Vysya Bank (Rs 329): Karur Vysya Bank has been on an intermediate-term downtrend since its January peak of Rs 574. Medium-term trend is also down for the stock. Last week, the stock tested its key long-term resistance at Rs 350 and started to decline. The stock is hovering well below its 50- and 200-day moving averages.

Failure to surpass its immediate resistance at Rs 350 in the ensuing weeks will pull the stock down to Rs 300 and then to Rs 284 in the short- to medium-term. Long-term investors can hold the stock with stop-loss at Rs 280.

The significant long-term trend deciding level for the stock is at Rs 284 levels. An emphatic fall below this level can pull the stock down to Rs 230 or even Rs 200 in the long-run.

Nevertheless, investors can look for an upward reversal from the aforementioned level. Important resistance above Rs 350 are positioned at Rs 375 and Rs 400.

The stock needs to rally above Rs 470 to alter its ongoing downtrend and trend upwards to Rs 510 and Rs 550 in the long-term.

Kindly give long-term advise on Punjab National Bank bought at Rs 998 and Bank of Baroda bought at Rs 898?

RM Kumarappan

Punjab National Bank (Rs 516.2): The stock has been on a long-term downtrend from its all-time high of Rs 1,395 recorded in November 2010. In early July this year, the stock decisively broke through its long-term support zone between Rs 680 and Rs 700 and prolonged its downtrend. Medium-term trend is also down.

The stock is currently testing key resistance at around Rs 550. Strong rally above this level will pave way for an up move to Rs 600 and then to Rs 680. Next important long-term resistance is at Rs 900 which is also a trend deciding level.

The stock needs to break out of this resistance for an up move to Rs 1,060 and Rs 1,200 in the long-term.

On the other hand, PNB has key support long-term support at Rs 400.

A conclusive downfall below this level will pull the stock down to Rs 300 in the forthcoming months.

Bank of Baroda (Rs 549.6): This banking stock is also in a long-term downtrend. The stock decisively breached its long-term support band between Rs 600 and Rs 620 in June and continued its downtrend.

After rebounding from key long-term support at Rs 450, the stock is now facing resistance at Rs 600. Only a strong rally above this level will take the stock northwards to Rs 730 initially and then to Rs 800.

However, the stock needs to decisively rally above Rs 900 to bring back bullish momentum and take it upwards to Rs 1,000 or to Rs 1,050 in the long-term.

But, inability to rally above Rs 600 will confine the stock trading in the wide range between Rs 450 and Rs 600.

A fall below Rs 450 will signal caution and the stock can trend downwards to Rs 400 or to Rs 350 which is a key long-term support.

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