Technical Analysis

Larsen & Toubro tests a key resistance

Yoganand D | Updated on January 13, 2018 Published on February 19, 2017

A break of the resistance at ₹1,500 can take the stock up to ₹1,600 in the long run



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

What is long term support and resistance for L&T? I have shares bought at ₹1,456.

Chandrashekhar

Larsen & Toubro (₹1,478): Following a sharp decline in the second half of 2015, the stock of Larsen & Toubro found support in the band between ₹1,050 and ₹1,080 in January and February 2016. Since then, it has been on an intermediate-term uptrend. The stock retraced 50 per cent of the uptrend and found support at around ₹1,300 in November and December 2016. As long as the stock trades above ₹1,300 levels, the intermediate-term uptrend will remain in place. Investors with a long-term view can consider buying in corrective declines with a stop-loss at ₹1,250.

Key support is in the ₹1,400-1,430 band. A decisive fall below this level can pull the stock down to ₹1,300. But a strong breakthrough of the immediate resistance at ₹1,500, which the stock curently tests, can take it northwards to the next significant resistance level at ₹1,600. Further rally beyond ₹1,600 will strengthen the uptrend and take the stock higher to ₹1,750 and then to ₹1,850 in the long term. Conversely, a slump below ₹1,300 will mar the uptrend and pull the stock down to ₹1,200 and then to ₹1,100 levels.

What is the medium and short-term outlook for the Shriram City Union Finance?

Singaiah Bodduluri

Shriram City Union Finance (₹1,908.3): After recording a new high of ₹2,650 in late October 2016, the stock of Shriram City Union Finance did a volte-face triggered by negative divergence in the weekly relative strength index. In early November 2016, the stock nose-dived sharply in a short span of time and found support in the band between ₹1,750 and ₹1,800. Since then, the stock has been on a medium-term sideways movement in the ₹1,750-2,050 range with a negative bias. An emphatic downward breakthrough of ₹1,750 can reinforce the downtrend and pull the stock down to ₹1,600 and then to ₹1,400 in the medium to long term. On the other hand, an upward break-out of ₹2,050 can push the stock higher to ₹2,150 and ₹2,300.

I hold Snowman Logistics at ₹63 per share. May I know its support and resistance levels? If I have to average, what is the best price?

Rohan Angadi

Snowman Logistics (₹56.8): The stock of Snowman Logistics has been on a long-term downtrend. Nevertheless, it found support at its long-term base zone between ₹48 and ₹50 in November and again in late December 2016. Triggered by positive divergence and backed by key support zone, the stock reversed direction in December. Since then, it has been a short-term uptrend.

But the stock met with a key resistance at ₹60 and has been testing it over the past four weeks. Strong break-out of this barrier is needed to strengthen the short-term uptrend and take the stock higher to ₹65 and ₹70 levels in the coming months. However, a slump below the immediate support level of ₹55 will mar the uptrend and pull the stock down to ₹50 once again. Strong rally beyond ₹70 is required to alter the intermediate-term downtrend. For this to happen, the stock needs to move beyond key resistance level of ₹90. You can average the stock at lower levels with a long-term stop-loss at ₹46.

Send your queries to techtrail@thehindu.co.in

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