Can you please provide the technical outlook for Axis Bank?
Tarun Kanti Sinha
Axis Bank (Rs 1,189): Axis Bank has not really gone anywhere since October 2010, moving in a wide trading band between Rs 800 and Rs 1,600. The support level that investors need to watch out for is at Rs 800. This occurs at the 61.8 per cent retracement of the rally, from the March 2009 trough.
This is a key Fibonacci support. The sanctity of this support has been highlighted by the reversal from this level in January 2012, and again in September this year. Investors with long-term perspective can, therefore, hold the stock as long as it trades above Rs 750. Investors can also buy the stock in declines with the same stop-loss.
An uptrend is currently unfurling from the September low. The stock has strong medium-term resistance at Rs 1,300. Investors with a short- to medium-term perspective can book some profit if the stock is unable to move beyond this level. Target on a sharp move above this level is at the long-term resistance zone between Rs 1,550 and Rs 1,600.
I bought Insecticides (India) at Rs 274 a share. The stock is currently trading at its 52-week low. Should I get out of this stock?
Insecticides (India) (Rs 235): Insecticides (India) is in a precipitous fall from the July peak of Rs 401, losing 42 per cent of its value. But that does not mean that you need to lose heart. The stock has a long-term support at Rs 230, where it is currently halting. There is another critical support below this level, at Rs 180. Long-term investors need to divest their holding in this stock only on a strong move below Rs 180.
Any rally from these levels will face resistance at Rs 300 and Rs 350. Investors with a short- to medium-term perspective can consider exiting the stock at these levels. These obstacles need to be surpassed for the stock to move towards its previous life-time high at Rs 431.
Kindly provide the technical outlook for BEML and United Bank of India. Are these stocks showing signs of bottoming-out?
BEML (Rs 172): BEML is sliding lower incessantly since the peak formed at Rs 702 in March 2012. Despite the stock attempting to stabilize around Rs 125, the reversal is far from convincing. Sideways movement between Rs 100 and Rs 200 can result in the stock declining to Rs 44, in the months ahead.
The stock needs to record a strong move beyond Rs 200 to signal the possibility of a rally to Rs 346 or Rs 488 in the medium-term. Investors can either switch out of this stock at these levels or sell the stock now, to re-enter on a close above Rs 200.
The long-term outlook for BEML will remain under a cloud as long as it trades below Rs 700.
United Bank of India (Rs 32): This stock has limited trading history that makes it difficult for us to identify long-term supports. The stock is currently trading near its life-time low of Rs 27.4. A decline below this can drag the stock to sub-Rs 10 level. Investors can switch out of this stock at current level and consider re-entry on a close above Rs 50.
Subsequent resistances are placed at Rs 63 and Rs 90. The stock needs to close above Rs 90 before the long-term view turns positive.
Is the limited trading history of MindTree and Persistent Systems sufficient to project the share prices in the coming 12 months?
MindTree (Rs 1,419): MindTree was listed in 2007 and its trading history is sufficient to form a long-term view on the stock. It is not too difficult to see that the stock is in a strong long-term uptrend. The stock had strong resistance around Rs 1,020, that was also the stock’s previous life-time high, formed on its listing day.
MindTree broke free of this level in July this year and currently trades 39 per cent above this level. The long-term outlook for the stock will reverse lower only if the stock closes below this level. This level can, therefore, act as the stop-loss for long-term investors.
Medium-term supports are at Rs 1,188 and Rs 1,036. Investors with a medium-term horizon can buy in declines as long as the stock trades above Rs 1,188.
An extrapolation of the up-move from August-2011 low gives us the immediate target at Rs 1,400. The stock has already achieved this level. If it manages to hold above Rs 1,188 in the upcoming months, it can proceed higher to Rs 1,582.
Persistent Systems (Rs 791): Persistent Systems is mimicking MindTree in recording a stellar up-move in the second half of this calendar. This chart is also in unchartered territory, hitting new life-time highs every week.
The support that investors need to watch out for the short-term trend is at Rs 685. The medium-term trend in the stock will reverse lower only on a close below Rs 586.
Investors, however, need to be a little vigilant and book profit in the stock, since it has already achieved its long-term target of Rs 800. The stock needs to record a strong break above Rs 820 to signal that it is on its way to the next target at Rs 978.
I bought Max India at Rs 189. Please advise the support, resistance and target levels for this stock.
Max India (Rs 184): Max India has critical support at Rs 150 and immediately below it at Rs 140. Investors can hold the stock as long as it trades above Rs 140. Sharp decline below Rs 140 can drag the stock below Rs 100.
The stock will face medium-term resistance at Rs 210 and Rs 223. Investors with a short- to medium-term perspective can exit the stock at either of these levels. The long-term ceiling for the stock is between Rs 260 and Rs 290. The stock might not be able to move beyond this resistance, just yet.
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