Technical Analysis

NBCC has hit the roof

Yoganand D | Updated on November 30, 2014 Published on November 30, 2014

The stock's candlestick pattern in the weekly chart signifies a downward reversal



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

I have bought shares of NBCC and Sun Pharma at ₹800 and ₹880 respectively. Kindly let me know the short and medium-term prospects of these holdings.

Sekhar

National Buildings Construction Corporation (₹789.3): After a decisive breakthrough of a significant long-term resistance at ₹195 in April 2014, the stock has been on a strong intermediate-term uptrend.

The stock extended its rally by breaking another key resistance at ₹460 in September. But, after recording a new high at ₹908 in early November, it began to decline. The near-term decline can turn into a medium-term downtrend.

The candlestick chart pattern in the weekly chart signifies trend reversal. Further, the indicators on the weekly chart are losing strength and displaying bearish signals backing the downward reversal. A conclusive fall below the immediate support at ₹700 can pull the stock down to ₹600 and then to ₹460 levels in the medium term.

The upside is limited to the immediate resistance at ₹900. Hence, consider exiting the stock at current levels and re-entering at lower levels.

Sun Pharmaceutical Industries (₹839.5): The stock broke out of a sideways band between ₹550 and ₹650 in late June this year and went on to register new highs.

After hitting a new high at ₹932 early last month, the stock commenced to decline witnessing selling pressure. Both short as well as medium-term prospects for this pharma stock are on the brink of turning bearish.

The price action in the weekly chart suggests that the ongoing uptrend is nearing an end and trend reversal is on the cards.

You can exit the stock on rallies and re-enter at lower levels for better returns. The stock is hovers above a key support at ₹800; a slump below this level will reinforce bearish momentum and drag the stock down to ₹750. A further fall below the key support level of ₹750 will pull the stock down to ₹650 and then to ₹550 over the medium term.

What is the outlook for GMR Infrastructure purchased at ₹21 and TV18 at ₹25? Can I hold it for the medium term?

Nikhil Agrawal

GMR Infrastructure (₹19.4): The stock of GMR Infrastructure continues to be in a bear’s grip. Since the 2007 peak of ₹134, the stock has been on a long-term downtrend.

Even medium and short-term trends are down for the stock. After a near-term rally in October, the stock encountered a significant long-term resistance at ₹23 and resumed its downtrend.

The stock trades well below its 50- and 200-day moving averages. The ideal strategy would be to exit the stock as the loss is minimal and switch to blue-chip stocks. Ongoing medium-term downtrend can find support at ₹17.5. A further fall will pull the stock down to ₹15 or even to ₹10.6 in the medium term.

A decisive rally above ₹23 can take the stock higher to ₹25 and then to ₹27.5 levels.

For an up move to ₹30 or ₹34 levels, the stock needs to first break through the crucial resistance at ₹27.5 levels.

TV18 Broadcast (₹29.9): The intermediate-term uptrend of the stock that commenced from the August 2013 low of ₹15.8 came to an end encountering a long-term resistance around ₹38 this June.

Since then, the stock has been on a medium-term downtrend. It met with an immediate resistance at ₹32 last week and started to decline.

This decline can strengthen the medium-term downtrend and fall to ₹27 initially. A further fall below this level can reach the support at ₹24.5.

This can evaporate your profits. Therefore, consider booking profits at the current juncture. Key resistances above ₹32 are at ₹35 and ₹38.

Please discuss the short-to-medium term view on KPIT Technologies.

Guntha Ramesh

KPIT Technologies (₹168.6): The stock has been in a broad sideways consolidation phase in the range between ₹150 and ₹180 since this January. Investors with a medium-term perspective can hold the stock with a stop-loss at ₹140.

An emphatic breakout of the upper boundary at ₹180 can take the stock higher to ₹200. Conversely, a fall to the lower boundary can drag the stock down to ₹140 and then to ₹130 in the medium term. Short-term trend is also sideways. Key short-term support is at ₹160 and resistance is at ₹175 levels.

Send your queries to techtrail@thehindu.co.in



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