Technical Analysis

Asian Paints is losing colour

Yoganand D | Updated on January 24, 2018 Published on February 08, 2015

The stock hovers at a crucial level that will decide its trend in the short term



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

What is outlook for Crisil and Asian Paints?

G Somashekhar, Kumar S

Crisil (₹2042.7): Since taking support at around ₹184 in late 2008, the stock of Crisil has been on a long-term uptrend. This was intensified after the stock broke through a key resistance at ₹1,250 in April 2014 and went on to record a new high.

However, the stock has a significant resistance in the band between ₹2,100 and ₹2,150. Testing this resistance zone, the stock fell 2.5 per cent on Friday.

This fall can extend in the short-term and the stock can test its immediate support at ₹1,950 levels. Further fall can find base at the lower boundary of the medium-term sideways consolidation phase between ₹1,800 and ₹2,150 levels.

Investors holding the stock can take partial profits off the table at the current juncture.

A decisive fall below ₹1,800 levels will pave the way for a decline to ₹1,700 or ₹1,600 in the medium term.

The long-term uptrend will be in place as long as the stock trades above ₹1,250 levels.

Asian Paints (₹797): The stock is in an uptrend across all-time frames. However, recording a new high at ₹922 in late January this year, Asian Paints began to fall, forming a bearish engulfing pattern.

Currently, the stock tests a key support as well as short-term trend-deciding level at ₹800.

An emphatic downward breakthrough of this support will strengthen the downtrend and pull the stock down to the level of ₹726 and then to ₹700 in the short term.

Next key supports are pegged at ₹670 and ₹600. A strong fall below ₹600 will mar the intermediate-term uptrend and drag the stock down to ₹500.

Investors can consider taking partial profits in this stock also. Resistances to note are at ₹850 and ₹920 levels.

I bought shares of PTC India Financial Services at ₹68. Please advice on support and resistance.

Rajendran N

PTC India Financial Services (₹59.4): Last month, the stock marked a new high at ₹73 and subsequently changed direction. It is in a short-term downtrend, which is now testing a significant support level at ₹58.

A strong breakthrough of this support will reinforce the downtrend and pull the stock down to ₹52 and then to ₹46 in the short term.

On such a fall, consider exiting the stock and re-entering at lower levels. Next important supports are at ₹43 and ₹40. Conversely, reversal from the current support can encounter resistance at ₹65 and ₹70 levels.

I am holding Unichem Laboratories. What is its medium to long-term outlook?

Anil

Unichem Laboratories (₹205.6): The stock failed to break through a significant long-term resistance (its December 2010 peak) at ₹268 in mid-December 2014 and reversed direction. Since then, it has been on a medium-term downtrend. It decisively breached a key support at ₹215 by tumbling 7 per cent last week.

The stock trades well below its 50- and 200-day moving averages. Now, it can find support at ₹195 which is the stock’s next key base level. An inability to hold at this level will pave the way for a further fall to ₹180 in the coming weeks. As long as the stock trades above ₹180, its long-term uptrend will remain in place and an upward reversal is possible. Significant resistances are placed at ₹215, ₹230 and ₹250 levels.

Can I buy IL&FS Transportation at the current price? What are its medium and long-term prospects?

Rajeev

IL&FS Transportation Networks (₹207.3): The stock’s intermediate-term downtrend that started from the July 2014 peak of ₹257 is still in place.

Following a corrective rally, the stock retraced 61.8 per cent Fibonacci retracement level and met with a key resistance around ₹220 in recent times.

The stock is losing momentum and appears to be resuming its downtrend.

A strong fall below the immediate support at ₹200 can pull the stock down to ₹185 and then to ₹170 levels.

Investor can consider buying at these support levels or breaking out at ₹220. This can alter the trend and take the stock northwards to ₹235 and ₹260 levels in the medium term. Significant supports are at ₹155 and ₹140 levels.

Send your queries to techtrail@thehindu.co.in

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