Ajanta Pharma still in a downtrend

The stock is not out of the woods. A rally above ₹1,600 is needed to turn it around

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

Can I buy Ajanta Pharma at these levels? When should I exit? Can this be considered a buy for the long term?

Sudhin Bathija

Ajanta Pharma (₹1,009): Following a strong rally that began in 2013, the stock of Ajanta Pharma registered an all-time high at ₹2,150 in October 2016. However, it subsequently changed direction and has been in a long-term downtrend since then, forming lower troughs and lower peaks.

 

While trending down, the stock decisively broke through a key long-term support at ₹1,180 in May 2018. Both medium- and short-term trends are down for the stock.

However, it found support at around ₹900 in early June and has been trending up. To alter the short-term downtrend, the stock needs to emphatically break above the significant resistance in the range between ₹1,180 and ₹1,200.

Such an upmove will strengthen the bullish momentum and take the stock higher to ₹1,300 and 1,340 levels. Investors with a medium- to long-term perspective can consider buying above ₹1,200 levels.

Further rally above these levels will alter the medium-term downtrend and take the stock upwards to ₹1,450 and ₹1,600 in the intermediate term. That said, to alter the long-term downtrend, the stock needs to conclusively break through ₹1,600 levels. Subsequent targets are ₹1,700 and ₹1,800 levels. On the other hand, inability to move beyond ₹1,200 will keep the stock wavering in the ₹900-₹1,200 band. A downward break of ₹900 will strengthen the downtrend and drag the stock lower to ₹800 and then to ₹700 levels.

What is the short, medium and long-term outlook for Sterlite Technologies?

Sudhakar Reddy

Sterlite Technologies (₹290): The long-term trend is up for the stock of Sterlite Technologies. Nevertheless, it has been in a medium-term downtrend since recording a new high at ₹414 levels in January 2018. After retracing 38.2 per cent fibonacci retracement level of the prior uptrend, the stock found support at around ₹260 last week.

 

Triggered by positive divergence in the daily relative strength index and witnessing buying interest at the key base level, the stock gained almost 9 per cent, accompanied with above-average volume on Friday. But the stock faces a key resistance ahead at ₹310.

An emphatic upward break-out of this barrier is needed to alter the short-term downtrend. Thereafter, a rally beyond ₹350 is required to change the medium-term downtrend that has been in place from January. Subsequent medium to long-term targets for the stock are ₹380, ₹400 and ₹416. Any corrective decline can find support at ₹260. Only a strong plunge below ₹260 will reinforce the downtrend and drag the stock lower to ₹240 and then to ₹210 levels.

Send your queries to techtrail@thehindu.co.in

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