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Here are answers to readers’ queries on the performance of their stock holdings
I have shares of Adani Ports bought at ₹294 and Coal India at ₹353. Should I buy more to average my price or sell and book loss.
R C Bhatia
Adani Ports (₹194.9): The stock of Adani Ports and Special Economic Zone tumbled 18 per cent last week. This fall was triggered by the company's fourth quarter earnings announcement in which it reported lower-than-expected cargo growth. With this fall, the stock appears to have resumed its intermediate-term downtrend that has been in place since August 2015 peak of ₹374.
After four years (2010-13) of sideways consolidation, the stock breached the upper boundary at ₹170 in early 2014. The stock then witnessed a strong rally in 2014 and mid-2015. But after registering an all-time high at ₹374 last August, it started to decline.
This downtrend found support at ₹170 in February and changed direction. However, after retracing the 38.2 fibonacci retracement level of prior downtrend, the stock encountered key resistance at ₹250 in early April. Since then, the stock has been on a short-term downtrend. It breached the 21 and 50-day moving averages and trades well below them.
The stock currently tests a support at ₹195. A fall below this level can find support at ₹180 and then at ₹170, which is a significant long-term base. You can consider averaging the stock in these declines with a stop-loss at ₹165. An upward reversal for the supports mentioned above can take the stock upwards to ₹210 and ₹220 levels.
Further move above this level can take the stock higher to the key resistance level at ₹250 in the medium term.
Conclusive breakthrough of ₹250 will strengthen the uptrend. Strong rally above ₹270 will alter the downtrend and take the stock higher to ₹300 in the long run. Key supports below ₹170 are at ₹155 and ₹145.
Coal India (₹281.9): Since recording a new high at ₹447 in August 2015, the stock of Coal India has been on an intermediate-term downtrend. The medium-term trend is down for the stock. But over the short term, it is in a sideways trading range between ₹272 and ₹290.
The stock has a key immediate support in the band between ₹270 and ₹272. A strong break below this base will strengthen the downtrend and drag the stock down to ₹250 and then to ₹240 in the medium term.
However, the stock has a significant long-term support in the ₹240-250 zone, which can arrest the stock's decline. You can consider averaging the stock on declines with a stop-loss at ₹240. An emphatic breach of the immediate resistances at ₹290 and ₹300 will reinforce short-term bullish momentum in the stock. Next resistances above ₹300 are at ₹320 and ₹340.
To alter the intermediate-term downtrend, the stock needs to emphatically move beyond ₹370. Such a move can take the stock upwards to ₹400 and then to ₹420 in the long term.
Investors with a long-term perspective can hold this good dividend yielding stock with a stop-loss at ₹240.
I have Bajaj Finance shares. What are the long term prospects of the stock?
Gajaria Gokaldas
Bajaj Finance (₹7,255.1): In mid-2013, the stock took support at around ₹1,000 and started to trend upwards. It has been on a long-term uptrend since then.
The stock has marked an all-time high at ₹7,532 in mid-April and began moving sideways.
It now faces resistance at ₹7,500. Strong break of this resistance can accelerate the stock upwards to ₹8,000 and then to ₹8,500.
However, the indicator and oscillators in the monthly chart are displaying negative divergence, indicating the uptrend is on the brink of reversal.
Such a trend reversal will be from a short to medium-term perspective and could provide buying opportunity for investors. The stock has immediate supports at ₹6,800 and ₹6,300.
A decisive fall below the second support will indicate that the short-term trend has reversed down and the stock can decline to ₹5,650, which is a key medium-term base level.
Next significant supports are at ₹5,000 and ₹4,500. Investor with a long-term perspective can stay invested with a stop-loss at the level of ₹4,350.
Send your queries to techtrail@thehindu.co.in
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