Chart Focus: Indian Hotels (₹135.65): BUY

The outlook for the stock of Indian Hotels is bullish. The stock has been on a long-term uptrend since August 2013. This uptrend has been within a bull channel. Within this channel, the stock fell to a low of ₹110 in early October and has reversed sharply higher from there.

The level of ₹110 is the channel support as well as the 200-week moving average. The stock has surged over 23 per cent from the lows, and now trades at ₹135.65, retaining its long-term uptrend.

A key short-term resistance is in the ₹140-142 region, which is likely to be tested in the near term. An inability to breach this hurdle can trigger a pull-back move to ₹130 or even ₹120 in the coming weeks. In such a scenario, the stock may remain range-bound between ₹120 and ₹142 over the short term.

However, the outlook will continue to remain bullish. As such, an eventual break above ₹142 will boost the momentum. Such a break will take the stock initially higher to ₹155. A further break above ₹152 will then increase the likelihood of the stock targeting ₹172 and ₹175 — the channel resistance over the medium term.

The bullish outlook will get negated only if Indian Hotels decisively breaks below the 200-week moving average (now at ₹112) support. The next target is ₹103. But such a strong downmove looks unlikely.

Investors with a medium-term perspective can go long at current levels and also accumulate on dips at ₹130 and ₹123. Stop-loss can be placed at ₹105 for the target of ₹172. Revise the stop-loss higher to ₹142 as soon as the stock moves up to ₹151. Move the stop-loss higher to ₹148 as soon as the stock moves higher to ₹155.

(This recommendation is based on technical analysis. There is a risk of loss in trading)

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