BHEL in a downtrend across time-frames

A rally beyond ₹75 is needed to alter the downtrend and take the stock up to ₹85

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

I bought BHEL shares at ₹65. What is the outlook?

Pavithra B

BHEL (₹60.9): The stock of Bharat Heavy Electricals Ltd (BHEL) is in a downtrend across all-time frames — long, medium and short term. In early September 2018, it encountered a key resistance at around ₹80 and resumed its downtrend. Since then, the stock has been in a medium-term downtrend. While trending down, it breached the key supports at ₹75 and ₹65. The stock tumbled sharply in early February and registered a multi-year low at ₹56.25. Subsequently it bounced and hovers above a key support in the band between ₹56 and ₹60.

 

But the stock faces a vital resistance ahead at ₹65. A strong break above this barrier will strengthen the bullish momentum and take the stock higher to ₹70 and then to₹75 in the short to medium term.

A further rally beyond ₹75 is required to alter the medium-term downtrend and take it up to ₹80 and ₹85. Next key resistances beyond ₹85 are at ₹90 and ₹100. On the downside, an emphatic plunge below the current support band will reinforce the downtrend and drag the stock down to ₹50 and ₹45 over the medium term. You can consider holding the stock with a stop-loss at ₹55. A strong rally beyond ₹75 will be cue for adding more shares and consider exiting in the range of ₹85-90 over the long run.

What are the prospects for Sun Pharma and CESC?

Gouri Saha

Sun Pharmaceutical Industries (₹423.3): Following a sharp tumble in November and early December 2018, the stock of Sun Pharmaceutical Industries found support in the band between ₹390 and ₹400. It took support from the band in mid-January and began to move up.

Over the last two months, there has been an increase in the traded volume. Also, both the weekly relative strength index and the weekly price rate of change indicators display positive divergence, implying that a potential trend reversal is on the cards.

 

On the upside, the stock faces difficulty in moving above the significant medium-term resistance level of ₹450. A conclusive break above this level will reinforce the bullish momentum and push the stock higher to ₹500 and ₹580 levels over the medium term. Investors with a medium-term horizon can consider buying in the stock in declines while maintaining a fixed stop-loss at ₹375 levels. A strong breach of ₹580 will accelerate the stock to ₹620 and ₹670 levels in the long term.

CESC (₹678.4): The stock of CESC has been consolidating sideways in the ₹630-740 range since September 2018. Investors can buy the stock in declines with a stop-loss at ₹620 and book profit at the upper boundary of the current sideways range.

 

Key supports below ₹630 are placed at ₹600 and ₹580. On the upside, the resistances above ₹740 are at ₹765 and ₹800. A conclusive break above the significant long-term resistance will strengthen the uptrend and take the stock higher to ₹835 and ₹900 over the long term.

Send your queries to techtrail@thehindu.co.in

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