Technical Analysis

Coal India turns red hot

Yoganand D | Updated on April 06, 2014 Published on April 06, 2014

Coal being transported in a lorry in the coal belt aria of Singareni Collieries Company Limited (SCCL).   -  THE HINDU




Coal India is beginning to reverse after a prolonged down-move

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

What’s your long-term technical outlook for Coal India and Tata Motors DVR

Panini Deshpande

Coal India (₹282): Following an intermediate-term downtrend, Coal India found support in the ₹240-250 band in September 2013. This support band provided base to the stock in February and March this year. Investors with a long-term perspective can hold the stock with a stop-loss at ₹240.

After a short-term uptrend, the stock has encountered a significant long-term resistance in the range of ₹290-300 last week.

A decisive breakout of this resistance will reinforce bullish momentum and take the stock northwards to ₹330 and then to ₹360 in the next one year.

Immediate medium-term resistance above ₹300 is at ₹310. On the downside, support levels are placed at ₹270 and then in the ₹240-250 band. Strong fall below ₹240 can pull the stock down to new lows.

Tata Motors DVR (₹215.9): The stock has been on a long-term uptrend since late 2011, when it took support at its long-term base zone between ₹80 and ₹85. Both medium- and short-term trends are up for the stock. Last week, the stock went up by 10 per cent, breaching its key resistance band between ₹205 and ₹210.

Moreover, the stock is hovering well above its 50- and 200-day moving averages. Investors with a long-term perspective can consider holding their long positions with a stop-loss at ₹150.

As long as the stock trades above its immediate long-term support at ₹185, it has a high probability of trending higher to ₹250 in the long run. Key immediate support levels are pegged at ₹205 and ₹185.

What are the future prospects for Reliance Industrial Infrastructure? What is the outlook for L&T Finance after it failed to get a bank licence?

J Rajagopalan

Reliance Industrial Infrastructure (₹409.4): Significant long-term support at ₹280 cushioned the stock’s fall in August and September 2013.

Subsequently, the stock started to trend higher and has been on an intermediate-term uptrend. Nevertheless, the stock is testing significant resistance at ₹410. A strong break of this level will pave the way for an upmove to ₹450 and then to ₹500 in the long term.

But a failure to move above ₹450 will jail the stock in the band between ₹400 and ₹450 in the short term, before it resumes its move upwards.

Key support points to watch are ₹360, ₹320 and ₹280.

L&T Finance Holdings (₹69.5): The stock encountered key resistance at ₹85 in March this year and did a volte-face, forming a bearish engulfing candlestick pattern. Since then, the stock has been on a short-term downtrend.

After its failure to get a banking licence, the stock tumbled almost 10 per cent on April 3, breaching its key support and 200-day moving average at ₹71. With this fall, the stock appears to have resumed its short-term downtrend.

Next support is at ₹68. A conclusive fall below this level will strengthen the stock's downtrend and pull it down to ₹64 or even to ₹60 in the medium term. However, an upward reversal from ₹68 can take the stock higher to ₹72 and then to ₹76 in the short term. But only a decisive breach of resistance at ₹80 will push the stock higher to ₹85 in the medium term.

Please give your medium and long-term outlook for Oriental Bank of Commerce

Rajesh Reddy

Oriental Bank of Commerce (₹225.5): After an unstoppable fall during the first half of 2013, the stock took support at ₹125 in August 2013 and started to trend upwards.

Since then, the bank has been on an intermediate-term uptrend. The short-term trend has been up from its February 2014 low at ₹160.

However, the stock encountered resistance at ₹240 last week. It encountered resistance at the same level in December 2013, but failed to breach it.

An emphatic breakthrough now will pave the way for an upmove to ₹270 and then to ₹295 in the medium term.

The inability to do so will drag the stock down to ₹200 in the short term.

The intermediate-term uptrend will remain in force as long as the stock trades above ₹160. Key support levels below ₹200 are ₹180 and ₹160.

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Published on April 06, 2014
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