Technical Analysis

Your Stock Portfolio: Dr Reddy’s Lab is losing vigour

Yoganand D | Updated on January 16, 2018 Published on October 09, 2016

A fall below ₹2,850 can strengthen the downtrend and drag the stock to ₹2,650

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

I have shares of Dr Reddy’s at ₹3,736 and Triton Valves at ₹1,170, should I buy more and average my position?

RC Bhatia

Dr Reddy's Laboratories (₹3,054.3): The long-term uptrend in the stock of Dr Reddy's Laboratories appears to have come to an end after encountering a key resistance at around ₹4,350 in August and October 2015. Since then, the stock has been on an intermediate-term downtrend.

It witnessed a sharp plunge in November 2015 and again in July 2016. Last week, the stock fell 1.8 per cent marginally, breaching its 50- and 200-day moving averages. The short-term trend is down for the stock. With immediate support placed at ₹3,000, the stock has a significant long-term support in the ₹2,850-2,900 band.

A conclusive plunge below ₹2,850 could strengthen the intermediate-term downtrend and drag the stock down to ₹2,650 and further to ₹2,500 in the medium to long-term time frame.

As long as the stock trades above the key long-term support at ₹2,400, the long-term uptrend will remain in place. An upward reversal from key support band between ₹2,850 and ₹2,900 is possible, provided the support holds well. You can wait and average the positions on an upward reversal with a stop-loss at ₹2,800.

Then, the stock can trend upward to ₹3,200, which is the immediate critical resistance. Further breakthrough of ₹3,300 is needed to alter the short-term downtrend and take the stock northwards to ₹3,500 and ₹3,700 levels. Strong rally beyond ₹3,700 is required to alter the intermediate-term downtrend and take the stock higher to ₹4,000 and ₹4,300 levels in the long term.

Triton Valves (₹1,163.4): The stock of Triton Valves witnessed a sharp upmove in 2014 and registered a new high at ₹1,279.9 in December 2014.

Since then, the stock has been on a sideways consolidation phase in the wide range between ₹850 and ₹1,250. Although the medium-term trend is bullish for the stock, there is a key resistance in the ₹1,200-1,250 range, which is limiting the upside. It tested this resistance last month and started to decline. As long as the stock trades above ₹1,000, the medium-term uptrend will remain in place.

A fall below the immediate support at ₹1,100 can however pull the stock down to ₹1,000. Exit the stock and re-enter at lower level with a stop-loss at ₹950. Conclusive breakthrough of ₹1,250 can take the stock northwards to ₹1,300 or even to ₹1,400 levels in the long run.

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