Technical Analysis

Piramal Enterprises tests a long-term hurdle

Yoganand D | Updated on March 03, 2019 Published on March 03, 2019

A break above ₹2,700 will reinforce the bullish momentum and take the stock up to ₹3,100

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

What is the technical forecast for the stock of Piramal Enterprises from a long-term perspective?

Shivaraj K

Piramal Enterprises (₹2,372.1): Following a sharp fall in September and October 2018, the stock of Piramal Enterprises found support at around ₹1,850 last October. Subsequently, it changed direction and has been in a medium-term uptrend.

The short-term trend is also up for the stock. But it now tests a key long-term resistance in the ₹2,300-2,400 band. Also, the 200-day moving average is poised around ₹2,400. A conclusive break above this resistance will strengthen the uptrend and take the stock higher to ₹2,600.

The stock needs to decisively move above ₹2,700 to alter the intermediate-term downtrend that has been in place since last September. A break above ₹2,700 will reinforce the bullish momentum and take the stock up to ₹2,900 and ₹3,100 over the medium term.

Inability to move beyond ₹2,700 will keep the stock consolidating sideways in a wide range between ₹2,300 and ₹2,700.

On the downside, if the stock falls below ₹2,000, the medium-term uptrend will be negated and the stock can slump to ₹1,800 levels in the medium term. Investors with a long-term perspective can make use of dips to accumulate the stock with a stop-loss at ₹2,000. Consider booking profits either at ₹2,900 or ₹3,100 in the long run.

I am a long-term investor. I have shares of Kalyani Steels purchased at ₹431 and Laurus Labs at ₹548. Should I sell or hold them?

Vipin Singh

Kalyani Steels (₹198.1): Since recording a multi-year high at ₹469 in June 2017, the stock of Kalyani Steels has been in an intermediate-term downtrend. The medium- as well as short-term trends are also down for the stock. However, it found base recently in the long-term support band between ₹180 and ₹190 and began to trend up.

On Friday, the stock surged 3 per cent, witnessing buying interest. There has been an increase in daily volume over the past one month. An emphatic rally above ₹220 is needed to alter the short-term downtrend. To change the medium-term downtrend, the stock needs to decisively break above ₹250 levels. It can trend up to ₹280 and ₹300 levels over the long term.

You can consider averaging the stock at current levels with a stop-loss at ₹175. A further rally above ₹300 will pave way for an upmove to ₹330 and ₹350 levels. Conversely, a conclusive fall below the key support band of ₹180-190 will bring back selling pressure and drag the stock down to ₹165 and ₹150 levels in the medium term. In such scenario, avoid accumulating the stock.

Laurus Labs (₹342.6): Ever since registering a new high at ₹634 in June 2017, the stock of Laurus Labs has been in a long-term downtrend, forming lower peaks and troughs. But it found support after recording a 52-week low at ₹324 this February and changed direction, triggered by positive divergence in the daily indicators.

Over the last week, the stock has been trending up and jumped 3 per cent on Friday. It needs to move above ₹370 to alter the short-term downtrend. Consider averaging the stock on a decisive rally above ₹370 with a long-term stop-loss at ₹340 levels. An emphatic break above the key barrier at ₹400 will strengthen the up-move and take the stock higher to ₹430 and ₹470 in the long term. Key support below ₹325 is at ₹300.

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