Technical Analysis

LG Balakrishnan poised above key support

Yoganand D | Updated on May 19, 2019 Published on May 19, 2019

A break above ₹400 will strengthen the momentum and take the stock up to ₹450

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

I hold LG Balakrishnan & Bros at an average price of about ₹440. What are the prospects?

Vijaykumar V

LG Balakrishnan & Bros (₹381.3): Following an intermediate-term downtrend from the new high of ₹682 in April 2018, the stock of LG Balakrishnan found support at its long-term base in the band between ₹350 and ₹360 last week.

Taking support, the stock gained 8 per cent last week with good volume. There has been an increase in weekly volume over the past three weeks.

The daily relative strength index displays positive divergence, backing the recent trend reversal and is on the brink of entering the bullish zone from the neutral region.

The weekly RSI has entered the neutral region from the bearish zone.

Also, the daily price rate of change indicator has entered the positive terrain, indicating buying interest.

With signs of trend reversal from the significant long-term support, the downside could be limited for the stock. You can consider averaging the stock at current levels with a long-term support loss at ₹325.

The stock faces a key resistance ahead at ₹400. A strong break above this barrier will strengthen the current bullish momentum and take the stock up to the ₹440-₹450 band in the medium term.

The long-term resistance in the ₹440-450 band needs to be breached to alter the medium-term downtrend and take the stock up to ₹500 and ₹550 over the long run.

However, inability to move beyond ₹450 can keep the stock in a sideways range in the wide band between ₹350 and ₹450. On the downside, a decisive fall below the key base level of ₹350 will strengthen the downtrend and drag the stock down to ₹330 and ₹300 levels in the medium term. In that case, investors should avoid taking fresh long positions.

I have shares of Bliss GVS Pharma bought at ₹175. Can I hold it for the short to medium term?

K Kanagaraj

Bliss GVS Pharma (₹171.3): Since taking support at ₹125 in December 2018, the stock has been in a medium-term uptrend. But itencountered a key resistance at ₹183 in early April and began to decline.

The short-term trend is down. Taking support at around ₹160, the stock jumped 7 per cent on Friday.

There has been an increase in daily volume over the past three trading sessions. The stock needs to decisively break above the key resistance at ₹183 to alter the short-term downtrend and strengthen the uptrend.

Such a break will underpin the bullish momentum and take the stock up to ₹195 and ₹207 levels over the medium term.

You can hold the stock with a stop-loss at ₹158.Conversely, a fall below ₹160 can drag the stock down to ₹150 and ₹140 in the short term.

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