HCL Technologies faces key barrier ahead

A break of the key resistance zone will take the stock higher to ₹1,200

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

What is the short- and long-term view for HCL Technologies?

Janardhanan Sivakumar

HCL Technologies (₹1,023.4)

The stock of HCL Technologies is in a long-term uptrend. After a medium-term corrective decline, the stock took support at around ₹710 in early 2016 and resumed its uptrend that has been in place since 2009.

 

Since mid-2016, the stock has been in an intermediate-term uptrend. However, a key long-term resistance in the ₹,1050-1,080 band limited the stock's rally this April. The stock found support at ₹880 in early June and is once again trending up. It now faces a significant resistance zone ahead is poised at a crucial level.

A conclusive upward breakthrough of the key resistance zone will strengthen the primary uptrend and take the stock higher to ₹1,130 and ₹1,200 levels in the long run.

However, failure to move beyond the key resistance zone will keep the stock consolidating sideways in a wide range between ₹880 and ₹1,080 for a while. Key supports to note within this range are pegged at ₹965 and ₹920. As long as the stock trades above ₹880, the intermediate-term uptrend will remain intact and investors with a medium-term perspective can stay invested with a stop-loss at ₹870. Vital supports below ₹800 are at ₹740 and ₹700.

Investors with a long-term horizon can stay invested with a stop-loss at ₹790 levels. Short-term trend is up. But to strengthen it, the stock needs to move beyond ₹1,050 and ₹1,080 levels for a short-term price target of ₹1,110.

I have bought VA Tech Wabag at ₹ 510. Should I hold or exit?

TVS Prakash Rao

VA Tech Wabag (₹382.7): Since recording a new high at ₹970 in early 2015, the stock has been in a long-term downtrend. In June 2017, it encountered a key resistance at ₹750 and resumed its downtrend. Since then, the stock has been in an intermediate-term downtrend.

 

While trending down, it had decisively breached key supports at ₹550 and ₹450. Nevertheless, it found support at ₹340 in July and has been in a corrective up-move. Recently, the stock breached its 21- and 50-day moving averages and hovers well above them. The stock faces key resistances ahead at ₹400 and ₹450. A strong break-out of these resistances is required to alter the medium-term downtrend and take the stock northwards to ₹500 and ₹550 levels over the medium term.

An emphatic break above ₹550 will alter the intermediate-term downtrend and take the stock higher to ₹600 and to ₹650 levels in the long term. Investors with a long-term perspective can stay invested with a stop-loss at ₹300. You can consider averaging the stock at lower levels with a stop-loss at ₹330 and stay invested for the long term.

Key supports below ₹340 are at ₹320 and ₹300. That said, a conclusive plunge below ₹300 will reinforce the downtrend and drag the stock lower to ₹260 and ₹240 levels.

Send your queries to techtrail@thehindu.co.in

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