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Here are answers to readers’ queries on the performance of their stock holdings.
I bought Brooks Laboratories at ₹48 and Eveready Industries at ₹94.50. Kindly advise on the technical outlook.
Ram Kumar
Brooks Laboratories (₹40.3): This stock was on a strong uptrend after breaking through a significant long-term resistance at ₹25 this June.
But the uptrend encountered resistance around ₹52 and reversed direction. Since then, the stock has moved sideways with a negative bias.
Key support at around ₹37 is holding the stock. A decline below this level can open the gates for a fall to ₹30 and then to ₹25 in the medium term.
Long-term investors can hold the stock and average as long as it trades above the base level of ₹25. An upward resumption from the key supports can take the stock higher to ₹45 and then to ₹55 in the medium term.
That said, the stock could witness selling pressure and decline to ₹20 or even to ₹15 on a decisive fall below ₹25 in the long term. So, exit the stock on such a breakthrough.
Eveready Industries India (₹101.5): Since bottoming out at the key support of around ₹15 in August 2013, the stock has been on a long-term uptrend and turned out to be a multi-bagger. But you have purchased the stock at the fag end of the uptrend.
Significant long-term resistance in the band between ₹105 and ₹115 dampened the stock's uptrend in September. Subsequently, it started to decline. Consider taking the profits off the table at the current juncture and exiting the stock, as the upside is limited.
Indicators in the weekly chart forecast a medium-term trend reversal. A fall below the immediate support level of ₹94 can drag the stock down to ₹85 and then to ₹75 over the medium term.
The long-term trend will stay positive as long as the stock trades above ₹65. Investors with a long-term perspective can hold the stock with a stop-loss at ₹60. A decisive breakout of ₹115 can accelerate the stock northwards to ₹130 and ₹150.
Please give your short-term target for BPCL and ONGC.
Jayaprakash
Bharat Petroleum Corporation (₹652.8): The intermediate-term uptrend that started from the support level at ₹315 this January appears to have come to a temporary halt after registering an all-time high at ₹722 in early September.
The stock has been on a near-term downtrend since then, which took support around ₹600 last week.
In the short term, the stock could move sideways between ₹600 and ₹700 with a negative bias. A strong fall below ₹600 will pave the way for a short-term downtrend to the targets of ₹550 or even to ₹520 levels in the coming months.
However, a positive breakthrough of ₹700 can push the stock higher to ₹750. Significant support below ₹520 is placed in the band between ₹425 and ₹435.
Oil and Natural Gas Corporation (₹402.6): After a sharp rally in May 2014, the stock encountered resistance at ₹470 in early June.
Since then, ONGC has been in a sideways consolidation in the range between ₹390 and ₹470.
Traders with a short-term perspective should tread with caution as long as the stock trades in this range. Indicators are showing signs of bearishness.
The stock is hovering slightly below its 21- and 50-day moving averages.
A downward breakout of ₹390 can drag the stock down to ₹350 in the weeks ahead. But an emphatic rally above the immediate resistance at ₹443 could take the stock higher to the upper boundary of ₹470 levels.
I have purchased shares of Voltamp Transformers at ₹890. What is your view on the stock?
Ramesh Chandrapal
Voltamp Transformers (₹655): The long-term downtrend of the stock, which began from the August 2010 peak of ₹1,135, continues.
The stock's uptrend from the support around ₹350 met with a key resistance at ₹750 this July, which also coincides with the 50 per cent Fibonacci retracement level of the prior down-leg.
The stock’s downtrend is intact. Since July, the stock has been moving sideways in the band between ₹640 and ₹750.
A trip below ₹640 will strengthen the downtrend and pave the way for a decline to ₹590 and ₹550 levels in the medium term. Investors with a long-term perspective can hold and average the stock at the support levels with a stop-loss at ₹490.
An upward reversal can take the stock once again to ₹700 and ₹750. But for the long-term downtrend to be altered, the stock needs to break ₹750 levels. Then ₹800 and ₹900 are the long-term targets.
Send your queries to techtrail@thehindu.co.in
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