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Here are replies to readers’ queries on the performance of their stock holdings.
What is the technical view for the IT Index in the short and medium term?
R T Rajasekaran
Nifty IT index (13,558.5): The Nifty IT index fell 0.8 per cent on Friday along with other sectoral indices. With this fall, the index declined 203 points or 1.5 per cent last week. It has been in an intermediate-term uptrend since taking support in the 9,300-9,400 band in November 2016.
Besides, the long-term trend continues to be up since early 2009. As long as the index trades above 8,000 levels, the long-term uptrend will remain in place. In November 2017, the index conclusively broke out of a significant long-term resistance at 10,800. Thereafter, it witnessed strong rallies during January and April of this year.
However, the index encountered a key resistance at 14,000, after marking an all-time high at 14,294 on April 23. Since then, the index has been in a sideways movement in the 13,400-14,000 range with a negative bias. The upper boundary at 14,000 levels has been capping the upside for more than a month. Moreover, the negative divergence in the daily and weekly indicators signifies a potential trend reversal in the index. A slump below the immediate support at 13,300 will confirm the trend reversal and drag the index down to 13,000 in the short term.
A fall further below 13,000 can pull it lower to 12,600 and then to 12,400 levels in the medium term. Next key supports are at 12,200 and 12,000 levels. On the other hand, an emphatic break above 14,000 is required to alter the bearish outlook and take the index up to 14,200 and 14,400 in the medium term. The intermediate-term uptrend will remain in place as long as the index trades above the key trend-deciding level of 11,800 levels.
What are the short- and long-term prospects for BEL bought at ₹160 and Federal Bank at ₹103?
Nagananthini Kannan
Bharat Electronics (₹111.4): Since encountering a key resistance at around ₹190 in November 2017, the stock has been in an intermediate-term downtrend. While trending down, it conclusively breached key supports at ₹145 and ₹125. Strengthening the downtrend, the stock fell about 6 per cent last week. But it tests a near-term support at ₹110 now.
A decisive plunge below this level can pull the stock down to the significant long-term support in the ₹94-98 band. Nevertheless, it can find support in this band and reverse higher.
You can consider averaging the stock at lower levels with a stop-loss at ₹90. Key resistances are at ₹125 and ₹145. Conclusive breakthrough above ₹145 can take the stock up to ₹160 and ₹175 levels. Next supports below ₹94 are at ₹80 and ₹70 levels.
Federal Bank (₹83): After marking a 52-week high at ₹127 in October 2017, the stock of Federal Bank changed direction and began to decline. It has been trending down since then. However, the stock trades above a crucial base level of ₹80. A slump below this level can pull it down to the next key support band between ₹70 and ₹74. Exit the stock in rallies and re-enter at lower levels. A fall below ₹70 can drag the stock down to ₹60 and then to ₹50 levels. Resistances are pegged at ₹90 and ₹105.
Send your queries to techtrail@thehindu.co.in
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