Here are some answers to readers’ queries on the performance of their stock holdings.
I have purchased LIC Housing Finance at ₹330. What are the prospects for the stock over the next one year?
JH Krishnamurthy
LIC Housing Finance (₹311.6): Since registering a new high at ₹352 in May 2014, the stock of LIC Housing Finance has been consolidating sideways in a wide band between ₹300 and ₹350. Within this range, the stock failed to surpass its key immediate resistance at ₹335. This level is close to your purchase price. Buying at resistance levels is not a good strategy.
Moreover, the stock plunged 4 per cent with above average volume, breaching its 21- and 50-day moving averages on Friday.
The indicators are on the brink of entering the bearish zone.
A decisive fall below ₹300 can drag the stock down to ₹280, ₹250 or even to ₹230 in the medium- to long-term. Consider exiting the stock and buying it later at aforesaid support levels with a stop-loss at ₹225.
On the upside, a strong surge above ₹335 can push the stock higher to ₹350 or new highs in the long-term.
What is the prospect of Power Finance Corporation, both in the short- and long-term?
RT Rajasekaran
Power Finance Corporation (₹270.6): The intermediate-term uptrend that started from the August 2013 low of ₹97, picked up momentum in May this year, after breaching a key resistance at ₹194.
The stock subsequently went on to mark a new 52-week high of ₹344 in early June.
As long as the stock trades above ₹220, its intermediate-term uptrend will remain in place and the stock can once again trend northwards to ₹340 in the long term.
Nevertheless, the stock’s short-term trend is down. It decisively broke a key support at ₹290 by plummeting 10 per cent on Friday.
The stock has conclusively breached its 21- as well as 50-day moving averages.
This can pave way for further decline to ₹250 and then to ₹230 in the short-term. Important resistances are pegged at ₹300 and ₹340.
Please let me know about Kitex Garments. Can I hold the stock or sell?
Anand Mody
Kitex Garments (₹230): In April 2014, the stock conclusively broke through the psychological barrier of ₹100 and accelerated upwards. The stock gained momentum and became a multi-bagger in a short span of time.
However, after registering a new high at ₹298 last week, the stock began trending down. It is now testing a key support at ₹230. A strong tumble below this level can drag the stock down to ₹200. Thereafter, key supports at ₹140 and ₹100 will come into play. Hence, sell the stock and take profits off the table at this juncture. Resistances are placed at ₹250 and ₹280 levels.
Please let me know the prospect of Tata Coffee purchased at ₹970 from a short-term perspective.
Sudheer
Tata Coffee (₹915.8): After falling sharply in June 2013, the stock found support in the band between ₹880 and ₹900.
Since then, it has been on an intermediate-term sideways consolidation phase. The stock fell 6.6 per cent last week and is hovering above the key support zone. A decisive fall below the support band will trigger fresh selling pressure and drag the stock down to ₹800 and then to ₹700 in the short term. Exit the stock in rallies. Key resistances are placed at ₹1,000 and ₹1,100 levels.
Send your queries to techtrail@thehindu.co.in
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