Technical Analysis

PFC in reversal mode

Yoganand D | Updated on January 20, 2018 Published on May 15, 2016

PFC in reversal mode

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

What are the support levels for PFC and REC stocks and can I buy at current levels?

M Kannappan

Power Finance Corporation (₹174.6): The stock of Power Finance Corporation has a significant long-term support in the price band between ₹145 and ₹150.

After testing this band in January and February, the stock price changed direction, triggered by positive divergence in the weekly relative strength index and price rate of change indicator.

Since then, the stock has been on a medium-term uptrend. It jumped more than 5 per cent with above-average volumes being witnessed on Friday, breaching its 21 and 50-day moving averages.

You can make use of declines to buy the stock, while maintaining stop-loss at ₹140.

Currently, the stock faces a significant near-term resistance at ₹182. An emphatic breakthrough from the above resistance level can pave the way for an up move to ₹200, which is also the 200-day moving average.

Further, rally above ₹200 can take the stock up to ₹230 and ₹250 over the medium to long-term. The stock has near-term support at ₹162. A slump below this level can drag the stock down to ₹145 over the medium term. Further key support levels to watch out for would be at ₹130 and ₹120.

Rural Electrification Corporation (₹164.7): Ever since the stock price faced a resistance at around ₹360 in March 2015, it has been on an intermediate-term downtrend. Subsequently, the stock price found support at its long-term base zone between ₹145 and ₹155 in February 2016 and started moving sideways.

Since February, the short-term trend has been a sideways movement in the price range of ₹150-180. Historically, the stock has reversed higher from the significant base range between ₹145 and ₹155.

Therefore, there is a possibility of such reversal if the stock retests this base. You can make use of dips to buy the stock while maintaining stop-loss at ₹140.

A decisive breakthrough of the upper boundary of the sideways range at ₹180 can take the stock higher to ₹195-200 band in the short term. Rally beyond ₹200 can push the stock up to ₹225 and ₹250 levels over the medium term. But to alter the intermediate-term downtrend, the stock needs to emphatically breach the key level at ₹265. Such a break can take the stock higher to ₹300 in the long run.

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