Bajaj Finance tests a key resistance

Breaking the ₹1,950 barrier can strengthen the uptrend and take the stock to new highs

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

What are the medium and long-term supports and resistances for Bajaj Finance?

Samar Kaushik

Bajaj Finance (₹1,918): The stock of Bajaj Finance gained 9 per cent, breaching an immediate resistance at ₹1,800 in the first week of April. Moreover, the stock has moved out of a downtrend slopping channel recently; this has bullish implications.

The stock also appears to have resumed its intermediate-term uptrend that has been in place since December 2016. Nevertheless, it has been testing a key resistance at ₹1,950 level over the past week. The stock has fallen 2 per cent last week, witnessing a corrective decline. An emphatic breakthrough of the key barrier of ₹1,950 is needed to strengthen the uptrend and take the stock to new highs. Next medium to long-term targets are ₹2,000 and ₹2,200.

But the stock can consolidate in a wide range between ₹1,600 and ₹2,000, if it fails to move beyond ₹2,000 levels.

A slump below the near-term support at ₹1,730 will mar the short-term uptrend and pull the stock down to ₹1,650 and ₹1,600 levels.

Further decline below ₹1,600 can bring selling pressure and drag the stock down to ₹1,500 or even to ₹1,400 levels in the medium term. Investors with a long-term horizon can hold the stock with a stop-loss at ₹1,200.

What is your opinion regarding investment in Aditya Birla Capital and Aditya Birla Fashion for the long term. What could be the ideal entry level?

Brij Mohan Lal

Aditya Birla Capital (₹156): Since listing in August 2017, the stock has been in an intermediate-term downtrend. While trending down, the stock breached key supports at ₹175 and ₹160 levels. But it ultimately found support at ₹144 in late March this year and began to move higher.

If you are a high-risk appetite investor, you can consider buying the stock at current levels with a stop-loss at ₹140. A decisive breach of the immediate resistance at ₹160 can push the stock higher to ₹175 levels. Subsequent resistances are at ₹190 and ₹205. To alter the downtrend, the stock needs to decisively break above ₹205 for long-term targets of ₹225 and ₹250.

Aditya Birla Fashion and Retail (₹147.1): After marking a new high at ₹263 in January 2016, the stock of Aditya Birla Fashion and Retail changed direction and fell sharply. However, it found support at ₹126 in March 2016 and has been in a sideways consolidation phase in the wide range between ₹126 and ₹185 since then. Within this band, the stock has been in a medium-term downtrend from the January high of ₹182. A strong rally above ₹165 can take the stock up to ₹185 once again.

A conclusive breakthrough of the upper boundary at ₹185 is required to strengthen the bullish momentum and push the stock higher to ₹200 and ₹230 levels. Further rally above ₹230 can take the stock upwards to ₹250 and ₹263 levels in the long term.

You can consider buying the stock in declines at around ₹130 with a long-term stop-loss placed at ₹120. A strong plunge below the lower end at ₹126 can drag the stock down to ₹110 or ₹100 levels. Next supports below ₹100 are at ₹90 and ₹80.

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