BEML is breaking barriers

Here are some answers to readers’ queries on the performance of their stock holdings.

NMDC stock, which fell last month seems to be bouncing back. Should I sell the stock now? Or is it expected to continue its uptrend?

Swamynathan S

NMDC (₹148.9): After struggling to breach its key resistance at ₹145 from November 2013 and February 2014, NMDC managed to break out of this resistance after the recent rally.

You can continue to hold the stock with a stop-loss at ₹125. The stock can extend its present uptrend and reach its targets at ₹165 and ₹180 in the medium term.

Subsequent important long-term resistance for the stock is pegged at ₹200. It would be premature to envisage an easy breakthrough of this resistance in the current scenario.

The stock can find it difficult to surpass this level in the long term. However, a decisive breach can take the stock northwards to ₹240 and ₹255.

On the downside, the stock has a significant long-term support at ₹125; it reversed in November 2013 and March this year. A strong fall below this level will mar the stock’s intermediate-term uptrend and pull it down to ₹110. Next important support is at ₹95.

I followed the latest bull run in BEML. It has resistances at ₹330 and ₹375 levels and a possible decline to ₹290 and ₹260 levels. But it seems to head straight to ₹450 without any correction. Please help me understand this run-up.

Ashish Singhal

BEML (₹397.5): The previous bull run in the stock was in 2009-10. After taking support at ₹290 in late 2008, the stock was on an uptrend until it met with a key resistance at ₹1,200 in January 2010.

This deterred the stock from climbing higher in September 2010. The stock has been on a long-term downtrend since then. As long as it trades below ₹700, the long-term downtrend will prolong.

But the stock found support, registering a multi-year low at ₹126 in August 2013. Since then, it has been on an intermediate-term uptrend. While trending up, the stock faced long-term resistance at ₹240 in December 2013 and a corrective decline. But this resistance was breached conclusively in March this year and the stock accelerated sharply with minor corrective pause and a small sideways move.

Apparently, the stock has a key long-term resistance at ₹290 (2008 trough). After moving sideways at ₹290, it emphatically broke this level in the last week of March.

Subsequently, the stock zoomed to ₹450, surpassing the less significant resistances at ₹330 and ₹375.

There is no hard and fast rule for the stock to undergo a major correction and decline to support levels, before moving further.

The chart movement of indicators should also be noted for a corrective phase.

What next? After hitting a hurdle in the ₹430-₹450 range, the stock reversed, forming a bearish engulfing candlestick pattern on April 15.

Now, it is in a minor corrective phase, which can extend to ₹375 or even to ₹330 in the short term.

However, the intermediate-term uptrend will stay in place as long as BEML trades above its significant long-term support at ₹290.

A fall below this level will drag the stock to ₹240. But breakthrough of ₹430 and ₹450 zone will pave way for an up move to ₹530 and then to ₹600.

Please give your medium- and long-term outlook for JP Power.

Yeruva Suneeta

Jaiprakash Power Ventures (₹16): The long-term trend is down for the stock. Its medium-term trend has been sideways in the band between ₹12.5 and ₹21 since September 2013.

The stock needs to break its key resistance zone between ₹26 and ₹30 to strengthen the bullish momentum and take it higher to ₹50 in the long term. But a decisive fall below ₹12.5 will pull the stock down to ₹8.5.

The medium-term sideways trend will extend as long as the stock is jailed between ₹12.5 and ₹21. A breakthrough of the upper boundary at ₹21 can push the stock northwards to ₹26 and ₹30 in the medium term.

Send your queries to techtrail@thehindu.co.in

COMMENT NOW