Technical Analysis

Coal India testing key support

Yoganand D | Updated on August 31, 2014 Published on August 31, 2014





Coal India testing key support

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

Request a long-term technical outlook for Coal India.

Panini D

Coal India (₹356.4): After a steady medium-term uptrend from the March 2014 low of ₹240, Coal India encountered resistance around ₹420 in early June. Since then, the stock has been on a short- to medium-term downtrend.

However, its key support zone between ₹350 and ₹355 is providing base and the stock is now testing this support level. A conclusive breach of this support zone will reinforce bearish momentum and pull the stock down to ₹320 and then to ₹300 in the medium term. Subsequent significant supports for the stock are at ₹270 and ₹250.

On the upside, the stock has key resistances at ₹380 and ₹400. It needs to decisively rally above ₹400 to alter the ongoing downtrend and take the stock higher to ₹420 and then to ₹450 in the long term. Investors with a long-term perspective can hold the stock with a stop-loss at ₹300.

I bought Alembic at ₹26 and McNally Bharat at ₹98. What is your long-term view on these stocks?


Alembic (₹40.2): The stock decisively breached its long-term resistance at ₹30 on August 22 and rallied sharply thereafter. However, after marking a new all-time high at ₹44.4 last week, the stock is now witnessing selling pressure. Both the daily and weekly indicators are hovering in the over-bought levels, implying that the stock is in for a correction. This can alter the medium-term down as well. Given that you have already made hefty gains on the stock (more than 50 per cent), it is advisable to book profits and exit. Key immediate supports are pegged at ₹35 and then ₹30. A conclusive fall below ₹30 can take the stock lower to ₹25 or even ₹22 levels. On the upside, the significant resistances are at ₹45 and ₹50.

McNally Bharat Engineering Company (₹105.8): Since bottoming out from the August 2013 low of ₹37, the stock has been on an intermediate-term uptrend. Over the past three months, the stock has been trading in a sideways consolidation phase in the range between ₹85 and ₹100. Last week, the stock broke out of this sideways range surging 9 per cent, accompanied by extraordinary volumes.

Investors with a long-term perspective can consider holding the stock with a stop-loss at ₹85. A fall below this level will be a cue to exit the stock, as it can decline further to ₹75 or ₹65 in the long term.

An emphatic breach of the immediate key resistance at ₹115 can take the stock northwards to ₹130 and then to ₹150 in the long term.

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Published on August 31, 2014
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