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Here are answers to readers’ queries on the performance of their stock holdings.
What are the long- and short-term views on Hindustan Unilever?
Sivakumar
Hindustan Unilever (₹1,638.9): Last week, the stock of Hindustan Unilever tumbled almost 8 per cent, accompanied by good volume. In mid-August this year, the stock registered a new high at ₹1,807 and started to move sideways, testing the key resistance at ₹1,800. Subsequently, it changed direction and began to decline, triggered by negative divergence in weekly relative strength index.
Both the weekly and monthly indicators are charting down, indicating signs of weakness. The sharp fall in the past week has decisively breached the medium-term up trend-line of the stock that had been in place since taking support at ₹1,300 in this March.
Further, the stock has also breached its 21 and 50-day moving averages and trades well below them. However, a key support placed at ₹1,600 is limiting the downside now.
An emphatic plunge below this base level will strengthen the down-move and drag the stock down to ₹1,550 and ₹1,480 over the short term.
A strong decline below ₹1,480 will alter the medium-term uptrend and pull the stock down to ₹1,400 and ₹1,300 levels over the medium term.
On the upside, the resistances pegged at ₹1,700 and ₹1,800 can limit the rally. A conclusive break above ₹1,800 is needed to take the stock higher to ₹1,900 and ₹2,000 in the long term. Investors with a short-term perspective can book profits on a fall below ₹1,600 and consider re-entering at lower levels.
As long as the stock trades above ₹1,300, the long-term uptrend will remain in place and the investors can remain invested with a stop-loss at ₹1,275. Key long-term supports below ₹1,300 are placed at ₹1,200 and ₹1,100 levels.
Is it worth adding McDowell’s from a medium-term view?
Sudhin B
McDowell Holdings (₹29.9): Since recording an all-time low at ₹16.35 in mid-2013, the stock of McDowell Holdings has been in a sideways consolidation phase in a wide range between ₹20 and ₹55. The stock struggled to move above the vital resistance at ₹55 in January 2018 and, subsequently, began to decline within the sideways range.
Nevertheless, it found support after recording a 52-week low at ₹23.3 in late July and has been in a corrective up-move since then. The stock could test a key resistance at ₹36 and a strong rally beyond this level can take it higher to ₹40 and ₹45 over the medium term.
With the volume traded low and the stock not progressing in a clear direction, desist taking position in the low liquidity stock. A fall below the immediate support level of ₹25 can pull the stock down to ₹20 and then to ₹16.5 over the medium term.
Send your queries to techtrail@thehindu.co.in
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