DB Realty crumbled 31 per cent over the past week, razing the rally that is on since September 2012. The stock crashed on reports of the nexus between Unitech promoter and CBI prosecutor in the 2G scam. Fears that Shahid Balwa, who is also an accused in the scam, could come under scrutiny, proved to be the stock’s undoing. The move last week confirms that the sharp drop witnessed from the September 2010 peak has not ended. Current decline could drag the stock down to Rs 70 or to its long-term support at Rs 46.

Investors can watch out for a reversal close to the second support as the stock reversed from this level twice in the second half of 2011. That said, it would be best to divest your holding on decline below Rs 46 since the decline can accelerate once this level is breached.

Medium-term resistance for the stock will be at Rs 168. Long-term trend will turn conducive only on close above Rs 210.

United Breweries (Rs 673.6)

United Breweries came under the bear’s hammer last week with the stock losing Rs 69 or 9 per cent. Reports that the Kingfisher brand owned by the company could be pledged to Kingfisher Airlines’ lenders sent the stock price reeling. The stock plunged to an intra-week low of Rs 580 before reversing higher.

That the stock managed a close above Rs 660 is a silver lining in the cloud. This is a key long-term support for the stock and the view for this time-frame will reverse only on a strong close below this level. Subsequent targets are Rs 540 and Rs 430.

Medium term hurdles will be at Rs 750 and Rs 850. Inability to move beyond Rs 750 will imply that the stock will head southward in the months ahead.

(This article was published on February 16, 2013)
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