GAIL on a slippery slope

A rally above the ₹160-165 zone is needed to alter the short-term downtrend and take the stock up to ₹185

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.

Send your queries to techtrail@thehindu.co.in

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