Wockhardt still in a long-term downtrend

To alter the downtrend, the stock must move past the ₹800-810 resistance band

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

What is the long-term outlook for the stock of Wockhardt?

Pradeep K

Wockhardt (₹509.5): The stock of Wockhardt has been on a long-term downtrend since encountering a key resistance at ₹1,000 in January 2018, forming lower peaks and troughs. While trending down, it decisively breached key supports at ₹700 and ₹550 and continued to decline. However, it found support after recording a 52-week low at ₹437 in late October 2018 and subsequently began to move sideways in the band between ₹470 and ₹570. This sideways consolidation phase is within the downtrend.

 

 

A strong break above the upper boundary at ₹570 will alter the short-term trend upwards and take the stock higher to ₹600 and then to ₹630 in the medium term. A further break above ₹630 will strengthen the bullish momentum and take the stock up to ₹650 and ₹700 over the medium term.

To alter the long-term downtrend, the stock needs to decisively break above the key resistance in the ₹800-810 band. Such a break will pave the way for an up-move to ₹900 and ₹1,000 over the long run. Investors with a long-term perspective can consider buying the stock either in dips or on a strong rally above ₹570 with a stop-loss at ₹450. Now, if the stock plunges below the lower boundary at ₹450, the downtrend will get reinforced and the stock would decline to ₹430 and ₹400. In that scenario, investors should avoid taking long positions.

I bought shares of Jain Irrigation Systems at ₹110. What are the long-term prospects and the target?

UN Sathish Babu

Jain Irrigation Systems (₹66.3): The stock has been on a long-term downtrend since registering a high at ₹150 in January 2018. But the vital support at ₹60 halted the downtrend and it has been on a sideways consolidation phase in the ₹60-75 band since then.

A strong rally above ₹75 can pave the way for an up-move to ₹85 and ₹95 in the coming months. On the other hand, a conclusive fall below the key base level of ₹60 will reinforce the downtrend and drag the stock down to ₹50-52 band in the medium term.

 

The next key support is at ₹46. You can consider averaging the stock at lower levels with a stop-loss at ₹58.

A decisive rally above ₹107 is needed to alter the downtrend and take the stock up to ₹115 and ₹125 in the long run.

Send your queries to techtrail@thehindu.co.in

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