Power Finance Corporation: In a sideways move

The stock found support at ₹70 in July 2018 and has been consolidating since then

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

I have shares of Power Finance Corporation bought at ₹88. What is your outlook?

Purushothaman S

Power Finance Corporation (₹78.6): The stock of Power Finance Corporation had encountered a key long-term resistance in the range between ₹165 and ₹170 in 2014 and again in 2017, and subsequently reversed direction. Since testing this key resistance band in May 2017, the stock has been on a long-term downtrend.

However, it found support at its long-term base level of ₹70 in July 2018, and has been consolidating sideways since then. The stock is in a medium-term sideways consolidation phase in the wide range between ₹70 and ₹90. Within this range, it took support at ₹75 and surged 3.7 per cent last week.

There has been an increase in daily volume traded over the past month. The stock can now trend up and test resistance at ₹90 in the short term.

An emphatic breakthrough of this barrier at ₹90 will strengthen the bullish momentum and take the stock higher to ₹100.

A further rally above ₹100 can take the stock northwards to ₹107 and ₹118 levels. The stock has a significant long-term resistance at ₹118, which is a key trend-deciding level.

A strong break above ₹118 will alter the long-term downtrend and accelerate the stock to ₹130 and then to ₹145 in the long run. You can consider averaging the stock at current levels with a stop-loss at ₹68. Key supports below ₹70 are at ₹65 and ₹60 levels.

I purchased Can Fin Homes at ₹496. Please advise whether to average, hold or book loss.

Narayanan

Can Fin Homes (₹244.9): After encountering a key resistance at ₹660 in July 2017, the stock of Can Fin Homes reversed direction. Since then, the stock has been on a long-term downtrend. Medium- as well as short-term trends are also down for the stock.

However, the stock found support in the band between ₹220 and ₹230 in late September 2018, and has been moving sideways since then. There has been an increase in daily volume over the past three weeks.

The stock has another key support below ₹220 at ₹200. You can consider averaging at current levels and in declines with a stop-loss at ₹190.

A conclusive rally above the immediate resistance level of ₹270 can push the stock higher to ₹300. But, to alter the short-term downtrend, the stock needs to breakthrough the vital barrier at ₹300.

Ensuing targets are ₹340 and ₹380 levels. Key resistances thereafter are at ₹400 and ₹450. Only a decisive break-out at ₹450 levels will change the long-term downtrend and take the stock higher to ₹500 levels.

Consider booking profits if the stock fails to move beyond ₹450 levels. Significant supports below ₹200 are pegged at ₹175 and ₹150 levels.

Send your queries to techtrail@thehindu.co.in

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