The Hindu Business Line : Chart Focus

Bharat Forge lost 54 per cent in the fall that ensued from the peak of Rs 485 made in March. The recovery since June has halted at exactly 61.8 per cent of this fall, making us assume that this rally was the second leg of a deeper correction. The target of the third leg of this correction falls at Rs 258 and then Rs 230. The stock is expected to fall to these levels over the next few months. Since, the stock is expected to move in a broad range between Rs 250 and Rs 400 over the next one year, re-entry can be done between Rs 250 and Rs 270.

The weakness in the weekly oscillators and the fact that the price has moved below both the 50 and 200 day moving averages makes the short-term outlook also negative. Short-term targets on the down side are Rs 330 and then Rs 313. Traders can short on rallies with a stop at Rs 380.

Follow-up

Balkrishna Industries (Rs 554):

There was hectic activity in this counter the first hour of trade on Monday. The price hit our short-term target of Rs 650 in this period, a gain of 12 per cent from the recommended price. But the price has not crossed Rs 610 since Monday.

Though this episode does teach us that it is best to wait for the initial dust to settle before buying in to a stock, those who have bought at higher levels can continue to hold this stock as the short-term support of Rs 540 has not been breached yet.

This stock is also a good bet for the long-term as the down side risk is limited here. Dips can be used to accumulate the stock with a stop at Rs 440.

(Note: The analysis and opinion expressed in these columns are based on the technical analysis of the past price behaviour. The stop-loss level provided with the recommendation is important. The original view would stand negated if the stop-loss level is breached. There is a risk of loss in trading)

Lokeshwarri S. K.

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