Technical Analysis

Cairn India is finding its feet

Yoganand D | Updated on November 23, 2014 Published on November 23, 2014

The stock is testing its key support at ₹270. An upward reversal is on the cards

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

I purchased Cairn at ₹300. Kindly give your short-term view.


Cairn India (₹270): Since encountering a key resistance at ₹385 in early June 2014, the stock has been on a medium-term downtrend. The short-term trend is also down. While trending down, the stock breached its key support at ₹270 and bounced back last week. Currently, it tests this base level. You can consider averaging and buying the stock with a stop-loss at ₹250 levels.

The indicators are showing signs of upward reversal. The short-term targets on such reversal are ₹290 and ₹300 levels. A strong rally above ₹300 can push the stock higher to ₹311 and ₹330 in the medium term. Next supports are at ₹230 and ₹210.

I want to invest in IDFC for long-term. Could you kindly advise the entry level?

Brij Mohan Lal

IDFC (₹157.4): As long as the stock trades above ₹120, its ongoing intermediate-term uptrend will stay intact.

You can consider buying the stock at current levels and accumulating at key support levels of ₹145, ₹135 and ₹125 levels respectively, while maintaining a stop-loss at ₹120. An upward reversal from these supports can take the stock higher. The subsequent resistance levels are at ₹165 and ₹185 over the medium term.

Kindly give me the future prospects of Kansai Nerolac.

Devidas L Pai

Kansai Nerolac Paints (₹2011.5): After every strong rally, the stock has undergone a sideways consolidation phase which continues for more than a year. The recent sideways consolidation phase came to an end in May 2014 when the stock conclusively broke through the key long-term resistance at ₹1,250 levels. The stock is now in a strong uptrend which is approaching a halt.

Last week, the stock surged 5.7 per cent. It now faces significant resistance at ₹2,100. If its uptrend comes to a halt, it can move sideways in a wide range between ₹1,650 and ₹2,100 levels. Key support below ₹1,650 is at ₹1,530, which is an important trend-deciding level. Plunge below ₹1,530 will mar the intermediate-term uptrend and pull the stock down to ₹1,400 or ₹1,250 levels in the medium term.

What is the medium- and long-term outlook for Marksans Pharma and Aries Agro?

Rajendran N

Marksans Pharma (₹63): Marksans Pharma is a subsidiary of Glenmark Pharmaceuticals. The stock broke out of a significant long-term resistance at ₹10 in December 2013 and has been on a long-term uptrend. It has surged seven-fold this year. Medium-term trend is up.

The stock encountered resistance at around ₹70 in September and has been on a short-term sideways movement in the band between ₹50 and ₹70. A breakout on either direction of this range will decide the next medium-term trend.

A fall below ₹50 can drag the stock down to ₹40 and then to ₹32 levels. Next significant supports are pegged at ₹25 and ₹20. Medium-term bullish outlook will stay intact as long as the stock trades above ₹40. Investors can hold the stock with a stop-loss at ₹40 and exit on a fall below this level. A strong rally above ₹70 can take it higher to ₹80.

Aries Agro (₹107.8): The stock has been on an uptrend across all time frames. Last week, it jumped 18 per cent accompanied by extraordinary volumes, breaking the significant long-term resistance at ₹100.

This rally has strengthened the ongoing uptrend. Traders with a short-term perspective can hold the stock with a stop-loss at ₹90.

Investors with a medium- and long-term horizon can hold with a stop-loss at ₹75. A fall below this level can mar the bullish outlook and pull the stock down to ₹65 or ₹55 levels in the long term.

On the upside, if the stock continues the uptrend, it can encounter key resistance at ₹120 and then at ₹140 in the medium- to long-term.

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