Technical Analysis

Tata Motors-DVR revving up

Yoganand D | Updated on August 17, 2014 Published on August 17, 2014

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

What is the long-term investment outlook for the stock of Tata Motors-DVR.

Pandurang D

Tata Motors-DVR (₹331.7): The stock took support around ₹280 in late June and again in July and continued its long-term uptrend.

Last week, it gained 12.5 per cent with good volume and also recoded a new high at ₹334 levels.

However, this rally is not promising on the weekly chart as the indicators are dismal and projecting a divergent trend.

This signals that the upside for the stock is restricted. Immediate resistance is at ₹340 and ₹360.

Inability to move beyond these resistances can drag the stock down to ₹317 and then to ₹300 levels.

A fall below ₹280 will threaten the medium-term uptrend; subsequent supports at ₹260 and ₹240 will then come into play. But as long as the stock trades above the significant support band between ₹200 and ₹210, its long-term uptrend will continue to be in place.

I bought shares of Patel engineering at ₹124. Kindly give the long-term outlook.

Tanush Kabra

Patel Engineering (₹101.3): After a strong rally in May, the stock encountered resistance at ₹150 in early June.

Since then, it has been on a short- to medium-term downtrend. Nevertheless, its key support at ₹100 is providing base now.

A strong fall below this level will drag the stock down to ₹90 and then to ₹76 or even to ₹60 in the medium term.

Therefore, consider exiting the stock. Next important supports below ₹60 are placed at ₹50 and ₹40 levels respectively.

On the upside, a decisive rally above ₹125 can take it to ₹140 or ₹150 levels.

The long-term trend is still down from the stock and only an emphatic rally above ₹275 will be a cue for emergence of bullish momentum which can take the stock higher to ₹350 and ₹400 in the long run.

I have shares of CARE Ratings bought at ₹750. Should I hold or sell? Please let me know the medium- and long-term outlook.

G Somashekhar

Credit Analysis and Research (₹1,219.6): Ever since bottoming out at the August 2013 low of ₹415, the stock has been on a long-term uptrend forming higher peaks and troughs.

While trending upwards, it decisively breached key resistances at ₹850 and then at ₹950, going on to register a new high at ₹1,259 on August 1.

But the stock is finding some selling pressure at higher levels and is moving sideways around the new highs.

The indicators on the weekly chart feature in the overbought levels, implying that the stock is poised for a correction or trend reversal. You are sitting on good profits; therefore, consider taking the profits off the table at this juncture.

A decline below the immediate support at ₹1,150 can pull the stock down to ₹1,050 in the short term. A further fall below ₹1,050 will strengthen the bearish momentum and drag the stock down to ₹950 or ₹925 in the medium term. A move above ₹1250 will encounter resistance at ₹1300 levels.

What is the short- and medium-term view on Andhra Bank which is near 200 DMA?

Jayaprakash

Andhra Bank (₹73.1): The stock’s sharp rally in May fizzled out after hitting a resistance at ₹110 in early June. Since then, it has been on a medium-term downtrend. After decisively breaking a key support at ₹80, Andhra Bank is now testing its next support as well as its 200-day moving average around ₹70.

There are no signs of trend reversal. Hence, we can’t rule out a breakthrough of this support in the near future. Such a fall can drag the stock down to ₹63 in the coming weeks.

Next significant supports for the stock are at ₹54 and ₹47. To alter the medium-term downtrend, the stock needs to conclusively break the resistance at ₹90 for an up move to ₹100 and then to ₹110.

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Published on August 17, 2014
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