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Here are answers to readers’ queries on the performance of their stock holdings.
Can I buy GAIL? Having corrected sizeably, please highlight the stock’s future prospects
R Raghavendran
GAIL (₹137.7): Since recording a new high at ₹199 in August 2018, the stock of GAIL (India) has been in an intermediate-term downtrend. In early June 2019, it nose-dived, breaking below a key long-term support in the ₹160-165 band. Thereafter, the stock extended the downtrend, breaching the next support at ₹150. Medium- as well as short-term trends are also down.
The stock trades well below the 50-day and 200-day moving averages. The daily as well as the weekly indicators hover in the bearish zone.
Reinforcing the downtrend, the stock had plunged 9 per cent last week. It trades above the key support at ₹135, which also coincides with the 50 per cent fibonacci retracement level of the prior uptrend.
A decisive fall below ₹135 will alter the long-term uptrend that has been in place from the August 2015 low of ₹73.
In that case, the stock can continue to trend down to ₹115 and ₹100 over the medium term. You can consider buying the stock at lower levels with a long-term stop-loss at ₹95.
Investors with a long-term perspective can book partial profits now and re-purchase at lower levels. On the upside, a decisive rally above ₹150 can witness a corrective up-move to ₹160. A strong rally above the ₹160-165 zone is needed to alter the short-term downtrend and take the stock up to ₹175 and ₹185. Next key resistance is at ₹200.
The stock price of Dilip Buildcon has been trending down. My average holding cost is ₹600. Should I further average at the current level or exit the stock?
Subramanian
Dilip Buildcon (₹407.2): Following a rebound in late June, the stock encountered a key resistance at ₹500 in early July and resumed the downtrend. Across all-time frames — long, medium and short term — the stock is in a downtrend. However, it is poised above a key support at ₹400 and could test it in the coming week.
A strong plunge below this base will strengthen the downtrend and drag the stock down to ₹350 and ₹320 over the medium term. You can wait and consider averaging at lower levels with a stop-loss at ₹300. An upward reversal from the key support level of ₹350 or ₹320 can take the stock higher. A break above the immediate resistance level of ₹450 can push the stock up to ₹500. To alter the short-term downtrend, the stock needs to decisively move above ₹500. Such a move will pave way for an up-move to ₹600 and ₹650 levels.
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