Market Strategy

An uptrend all the way for Petronet LNG

Yoganand D | Updated on January 13, 2018 Published on February 26, 2017

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However, a trend reversal could well be on the cards

Here are answers to readers’ queries on the performance of their stock holdings.

What is your advice on Petronet LNG and Asian Paints? Please suggest a suitable level to buy for a one-two year horizon.

Ashish Pathrabe, Sudhin

Petronet LNG (₹401): The stock of Petronet LNG is in an uptrend across all time frames — long, medium and short-term. So far this month, the stock has surged 7.3 per cent. However, the stock encountered a key resistance in the range between ₹395 and ₹405 last October and has been testing it since then. Last week the stock moved sideways, testing this resistance range.

The indicators and oscillators in the monthly chart are featuring the overbought levels, indicating a trend reversal is on the cards. Therefore, you can buy partially now and wait for the corrective decline to average at lower prices in the key support levels. Such a trend reversal can pull the stock down to ₹375 and ₹360 initially. Further fall can pull the stock down to ₹345 levels in the medium term. Next key supports are placed at ₹315 and ₹300. Investors with a long-term perspective can hold the stock with a stop-loss at 290.

A conclusive breakout of the key resistance band between ₹395 and ₹405 will strengthen the stock’s uptrend and take it northwards to ₹430 and ₹450 levels in the medium to long term. Only a strong decline below ₹280 will alter the long-term uptrend for the stock.

Asian Paints (₹1,008.8): The stock of Asian Paints is on an uptrend in long as well as short term. But, the medium-term trend has been down since registering a new high at ₹1,230 in late October. This downtrend will remain in place as long as the stock trades below the significant resistance level of ₹1,050. The short-term trend has been upwards since taking support in the ₹850-₹870 range in late December. Last week, the stock gained almost 5 per cent with good volume. It now tests a key resistance and also 200-day moving average in the ₹1,030 and ₹1,050 zone.

An emphatic breakout of this resistance zone will alter the medium-term downtrend and take the stock higher to ₹1,100 and ₹1,150. Such a rally will be a continuation of the long-term uptrend and the stock can trend northwards to ₹1,200 and ₹1,250 levels in the long run. You can buy the stock in declines with a medium-term support at ₹935. But a decisive slump below the key short-term support level of ₹940 will alter the short-term downtrend and pull the stock down to 900 or even lower to 870. Investors with a long-term perspective can consider buying in corrective declines and hold the stock with a stop-loss at ₹840.

I bought SAIL shares at ₹53. Please give your views.

Vamsi Kamepalli

Steel Authority of India Ltd (₹60.1): The long-term trend continues to be down for the SAIL stock. However, ever since recording a multi-year low of ₹33.5 in February 2016, the stock has been on an intermediate-term uptrend. In January, it emphatically breached a significant resistance at ₹55 and continued its uptrend. But, it met with another key hurdle at around ₹66 and started declining after forming a bearish engulfing candlestick pattern in the weekly chart in early February. The near-term trend is down and indicators are negatively biased. You can consider booking some profits at this juncture.

A fall below the immediate support level of ₹58 can pull the stock down to ₹55. Further slump below this long-term base level will bring back selling pressure and pull the stock down to ₹53 and ₹50 levels in the medium term. Only a conclusive fall below ₹50 is needed to alter the intermediate-term uptrend. Investors with a long-term view can stay invested with a stop-loss at ₹48. An emphatic break above ₹66 can push the stock higher to ₹73 and ₹78-₹80 range in the long run.

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Published on February 26, 2017
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