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Here are answers to readers’ queries on the performance of their stock holdings.
Please advise me on Jindal Steel & Power bought at ₹224 and NMDC bought at ₹142. Should I average?
Naresh G
Jindal Steel & Power (₹176.4) : The stock of Jindal Steel & Power has been in an intermediate-term downtrend since encountering a key resistance at ₹294 in January 2018. Following a corrective medium-term uptrend, the stock met with a vital resistance at around ₹240 in mid-September and resumed its downtrend.
Over the past two weeks, the stock has nose-dived almost 25 per cent. While trending down, the stock decisively breached its 200- and 50-day moving averages, and trades well below them.
However, following a sharp fall, the stock currently tests a key support as well as the 50 per cent Fibonacci retracement level of the prior uptrend in the band between ₹170 and ₹180.
Only a conclusive fall below this support band will strengthen the downtrend and drag the stock down to ₹150 in the short term.
The stock has significant long-term support at ₹135. As long as the stock trades above this base level, the uptrend will remain in place. Investors with a long-term perspective can stay invested, with a stop-loss at ₹130.
If you are a long-term investor, you can wait for the dust to settle in the market, as well as in the stock, and consider averaging at lower levels, with a stop-loss at ₹130. On the upside, a strong rally above the key resistance level of ₹200 can take the stock northwards to ₹225 and ₹240 levels. An emphatic breakthrough of the vital resistance level of ₹240 is required to alter the downtrend and take the stock higher to ₹270 and ₹300 levels in the long run.
NMDC (₹109) : The stock of NMDC is also in an intermediate-term downtrend from the January 2018 peak of ₹162. However, after a medium-term corrective up-move, the stock met with a barrier at ₹124 in mid-September. Subsequently, the stock continued to trend downwards, resuming the intermediate-term downtrend.
On Friday, the stock plunged 5 per cent, with good volumes, breaching the key support at ₹113. The stock can extend its down-move and test the support at ₹100 in the short term. An upward reversal from this base level can take the stock northwards to the resistance in the ₹113 and ₹115 band.
A conclusive break above this resistance can bring in a bullish momentum and take the stock higher to ₹125 and ₹130 levels.
To alter the intermediate-term downtrend, the stock needs to move past the key resistance at ₹130.
Such a break can take the stock higher to ₹145 and then to ₹165 in the medium to long term. Key supports below ₹100 are at ₹95 and ₹90. You can average the stock at lower levels with a stop-loss at ₹95.
Send your queries to techtrail@thehindu.co.in
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