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Here are answers to readers’ queries on the performance of their stock holdings.
I would like to invest in Jubilant FoodWorks for a short term. Please advise.
Ashish
Jubilant FoodWorks (₹1,516): Since bottoming out in December 2016 from the low of ₹380, the stock has been in a long-term up-trend. Both the medium- and short-term trends are also up for the stock. Last week, the stock gained 4.8 per cent with thin volumes, and closed at record highs.
However, the stock tests a key resistance in the band between ₹1,500 and ₹1,530. Also, the daily and weekly indicators are showing negative divergence, implying trend reversal is on the cards. Therefore, investors with a short-to-medium-term perspective should avoid buying the stock at current levels as there is a possibility of a short-term corrective decline. A downward reversal from the current resistance zone can drag the stock down to the immediate support level of ₹1,400, and then to ₹1,300 in the short term.
A further fall below ₹1,300 will be a threat to the medium-term up-trend and can drag the stock lower to the subsequent support level of ₹1,200 and ₹1,150 levels. A strong close below ₹1,150 can pull the stock down to ₹1,050 and ₹950 levels.
That said, an upward reversal from the key medium-term support band between ₹1,150 and ₹1,200 can take the stock northwards. Investors with a short-to-medium-term perspective can wait for a corrective decline and buy the stock at lower levels with a stop-loss at ₹1,140 levels. A strong rally above the current resistance zone could be short-lived and the stock can encounter resistance at ₹1,600. Investors with a long-term perspective can stay invested with a stop-loss at ₹940.
What are the short- and long-term prospects for Granules India bought at ₹122, and Power Finance at ₹105?
Naresh
Granules India (₹104.1): Following a medium-term down-trend, the stock of Granules India found support at around ₹72 in early June this year and changed direction. Since then, the stock has been in a short-term up-trend. However, the stock now tests a crucial resistance at ₹109 and at its 200-day moving average at ₹111. Moreover, this resistance zone coincides with the 50 per cent fibonacci retracement level of the prior down-trend.
An emphatic upward breakthrough of ₹111 is required to strengthen the up-trend and take the stock higher to ₹120 and ₹135 levels in the medium term. Such a breakthrough will also alter the down-trend that has been in place from the January high of ₹150. On the downside, a fall below the key support level of ₹92 will reinforce the down-trend and pull the stock down to ₹85 and ₹77 levels. Consider booking partial loss if the stock fails to move beyond ₹111 levels, and average the stock at lower levels with a stop-loss at ₹85.
Power Finance Corporation (₹86.4): Both the medium- and short-term trends are down for the stock. But it found support at its 52-week low of ₹67 recorded in mid-July this year. The stock has been in a near-term up-trend from there.
There has been an increase in volume over the past three weeks. That said, the stock faces the challenge of surpassing the resistance at ₹90. A strong break above this level can pave way for an up-move to ₹100 and ₹110 levels. Next resistances are placed at ₹117 and ₹130. You can average the stock in dips with a fixed stop-loss at ₹75. Key supports are placed at ₹79 and ₹70.
Send your queries to techtrail@thehindu.co.in
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