Technical Analysis

ONGC floats above a key support

Yoganand D | Updated on December 07, 2014 Published on December 07, 2014

The stock can find support at ₹350, which is a significant long-term base

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

I purchased ONGC at ₹425. But the stock has been impacted by falling crude prices. Please give the medium-term outlook for this stock.


Oil and Natural Gas Corporation (₹365.8): The stock has been on a medium-term downtrend after registering a new high at ₹472 in June 2013. Recently, it breached its key support at ₹390 and continued to decline.

This downtrend can find support at ₹350, which is the 50 per cent Fibonacci retracement level of the earlier up-move.

You can consider averaging around this base level with a stop-loss at ₹335 levels. An upward reversal can take the stock higher to ₹390 and ₹415 levels. Next key long-term resistances are at ₹430 and ₹458 levels.

On the downside, however, a strong breakout of ₹350 can take the stock down to ₹320 and ₹300 in the medium term.

But an emphatic rally above the immediate resistance at ₹443 could take the stock higher to ₹470 levels.

I have shares of Welspun Projects, bought at ₹60 per share. What are the prospects for the company?

Ajit Bokdia

Welspun Projects (₹30.9): Since the April 2010 peak of ₹200, the stock has been on a long-term downtrend.

However, the stock found support at around ₹8 in mid-2013 and started to trend higher. It is in a medium-term uptrend.

A significant resistance at ₹35 acts as a strong barrier. A decisive breakthrough of this resistance can take the stock higher to ₹40 and then to ₹50.

The next significant long-term resistance is at ₹60, which needs to be breached decisively for an up-move to ₹80 levels. However, such a rally would take time.

You can exit the stock on rallies and switch to blue-chip stocks. On the downside, a fall below ₹26 will pull the stock down to ₹19 and ₹14 levels in the medium term.

Kindly give me the future prospects of Patel Integrated Logistics and Brooks Laboratories.

Loganayahi K

Patel Integrated Logistics (₹115): After breaking through a key long-term resistance at ₹40 in September this year, the stock accelerated to register a new high of ₹140 in late November.

Nevertheless, the presence of a significant long-term resistance at ₹130 limited the stock’s uptrend. The stock has been on a short-term downtrend for more than two weeks.

There is a decrease in weekly volumes over the past three weeks.

A conclusive fall below the psychological support at ₹100 will trigger selling pressure and pull the stock down to ₹70 in the medium term.

Hence, investors sitting on profits can consider taking them off the table at this juncture. Subsequent supports are at ₹55 and ₹40 levels. To reinforce further bullish momentum, the stock needs to breach the long-term resistance at ₹130 for an up-move to ₹140 and ₹150 levels.

Brooks Laboratories (₹46.9): After breaching its significant long-term resistance in June 2014, the stock met with a resistance around ₹52 in August.

Since then, the stock has been on a medium-term sideways move in the range between ₹37 and ₹52. For a clear medium-term trend, the stock needs to break out of this zone.

A strong upward break can take it higher to ₹60 or ₹70 levels. But a downward breakthrough of ₹37 can pull it down to ₹30 and then to ₹25 in the medium term.

Investors with a long-term perspective can hold the stock and average as long as it trades above the key support level of ₹25.

An upward resumption from the key supports at ₹37 or ₹35 can take it northwards to ₹55 in the medium term. Conversely, a decline below ₹25 can pull the stock lower to ₹20 or ₹15 in the long term. In such a scenario, one can exit the stock.

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