Ashok Leyland in a medium-term downtrend

A break below ₹90-92 can drag the stock down to the ₹75-80 support range

 

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

What is the outlook for Ashok Leyland and South Indian Bank?

Pavithra Baskaran

Ashok Leyland (₹92.3): Since recording a new high at ₹167.5 in May 2018, the stock of Ashok Leyland has been on a medium-term downtrend. The long-term uptrend that started in mid-2013 is weakening. The stock has been on a short-term downtrend since early November 2018. But it now tests a significant long-term support in the ₹90-92 band; the 50 per cent fibonacci retracement level of the long-term uptrend coincides with this band.

A strong break below this support can drag the stock down to the key trend-deciding support in the ₹75-80 range. As long as the stock trades above this zone, the long-term uptrend will remain in place. An upward reversal from the key supports can take the stock higher to ₹105 and ₹113 in the short term.

An emphatic break above the key resistance level of ₹120 will take the stock up to the significant medium-term resistance level of ₹130. Next targets on a breakthrough of ₹130 will be ₹150 and ₹160. Investors with a long-term perspective can stay invested with a stop-loss at ₹72. Key supports below the long-term support level of ₹75 are at ₹70 and ₹60.

South Indian Bank (₹15.5): The stock of South Indian Bank is on a downtrend both in the medium term as well as long term. In the short term, the stock has been moving sideways in the ₹15-17 band since last November. A clear break-out of this sideways consolidation phase will depict the next short-term trend.

An upward break of ₹17 can push the stock higher to ₹18 and ₹20 over the medium term.

On the downside, if the stock tumbles below the key support level of ₹15, it will reinforce the downtrend, which could drag the stock down to ₹14 and ₹13.

A further fall below ₹13 can pull it lower to ₹12 and ₹10 in the long term.

Only an emphatic break above the vital resistance at ₹23 will alter the medium-term downtrend and take the stock up to ₹25 and ₹27 in the coming months.

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