Stock Fundamentals

Stock query: Bharti Infratel on long-term downtrend

Yoganand D | Updated on August 09, 2020 Published on August 09, 2020

Decisive rally above an immediate resistance at ₹210 can bring back bullish momentum

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

I hold shares of Bharati Infratel. Can I exit and re-enter the stock? What will be a good price to do so?

RT Rajasekaran

Bharti Infratel (₹192.5): Since encountering a significant long-term resistance at ₹480 in October 2017, the stock of Bharti Infratel has been on a long-term downtrend.

The stock recorded a multi-year low at ₹121.2 in late March this year and had been on a medium-term uptrend until it met with a key resistance between ₹240 and ₹250 in early June.

Thereafter, the stock started to decline, and appears to have resumed the long-term downtrend.

Currently, it is poised above a key support at ₹180 and the 50 per cent Fibonacci retracement level of the previous uptrend.

An emphatic fall below this base can pull the stock down to ₹160 and then to ₹150 levels.

A further fall below ₹150 will strengthen the long-term downtrend and drag the stock down to retest the support at ₹121 over the medium term.

On the upside, the stock has an immediate resistance at ₹210.

A decisive rally above this barrier can bring back bullish momentum and take the stock northwards to the ₹240-250 range over the medium term.

An emphatic break above ₹250 will be positive from a long-term horizon and can take the stock northwards to ₹280 and then to ₹300. A move beyond ₹300 is needed to alter the downtrend and take the stock higher to ₹325 and ₹350 in the long run.

You can make use of declines to buy the stock with a stop-loss at ₹140. Consider booking partial profits if the stock fails to move beyond ₹250 levels.

I have shares of Tata Motors DVR, purchased at a higher price than now. What is the outlook for the stock? Should I hold and average, or sell my holdings?

Muhamed Aleef EM

Tata Motors - DVR (₹41): The stock has been on a long-term downtrend since its 2016 high of ₹377. It marked a multi-year low at ₹28 in late March this year, and started to consolidate sideways in a wide range between ₹30 and ₹50 thereafter.

An emphatic break above ₹50 can push the stock northwards to ₹65 and then to ₹84 over the medium term. A strong break above the long-term hurdle at ₹84 will alter the intermediate-term downtrend and accelerate the stock northwards to ₹100.

An upmove beyond this level can take the stock higher to ₹115 and then to ₹133 over the long term. As long as it trades below the crucial resistance between ₹200 and ₹210, the long-term downtrend will remain in place.

On the downside, if the stock tumbles below the lower boundary of ₹30, it can bring back selling pressure and pull the stock lower to ₹21 and then to a new low. You can consider averaging the stock on declines with a stop-loss at₹30.

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Published on August 09, 2020
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