Technical Analysis

Axis Bank to continue its upward journey

Yoganand D | Updated on August 03, 2014 Published on August 03, 2014

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The stock will, however, move in the ₹350-400 range in the short term



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

Please give technical outlook on South Indian Bank and Axis Bank.

M Ajikumar

South Indian Bank (₹29.7): The stock's price-volume breakout of the resistance level at ₹30 in July was short-lived. After recording an all-time high at ₹35, the stock began to fall. It now appears to have re-entered the long-term consolidation phase in the wide band between ₹20 and ₹30.

A decline below ₹26 can reinforce bearish momentum and pull the stock down to ₹23 and then to ₹20 in the medium term. Since 2010, the stock has been in sideways consolidation.

However, its long-term uptrend will remain intact as long as it trades above ₹20. Investors with a long-term perspective can consider holding the stock with a stop-loss at ₹19. Long-term targets are ₹35 and ₹40.

Axis Bank (₹387.5): The stock has been on an intermediate-term uptrend since taking support at ₹160 (adjusted for stock split) in September 2013. The medium-term trend is also up.

However, the short-term trend has been sideways after encountering resistance around ₹400 in early June this year. The stock has been swinging in the band between ₹350 and ₹400. A slump below ₹350 will pull the stock down to ₹330 and then to ₹300.

Only an emphatic breakthrough of the long-term support at ₹300 will alter the stock's medium-term uptrend. The next significant supports are at the ₹280 and ₹260 levels. The intermediate-term uptrend will remain in place as long as the stock trades above ₹260.

Supports at ₹220 and ₹200 will hold up the stock if it falls below ₹260, which is unlikely in the medium term. Key resistances above ₹400 are at ₹420 and ₹440.

Is Capital First a good buy at the current levels for the short- to medium-term?

Krish

Capital First (₹237.5): The stock has been on an intermediate-term uptrend from its January 2014 low at ₹125. However, it encountered a key long-term resistance at ₹250 in mid-July and is now moving sideways. It is not advisable to buy the stock at key resistance levels. Therefore, wait for corrective declines and buy at key support levels of ₹200 and ₹170 in the short- to medium-term.

Alternatively, a decisive breakout of the hurdle at ₹250 will also be a buying opportunity. In such a scenario, the stock can continue its uptrend and target ₹276 and ₹300 levels in the medium- to long-term.

In the short term, the stock may continue to hover between the ₹220 and ₹250 range with a negative bias. A fall below ₹220 can drag the stock down to ₹200. As long as the stock trades above ₹170, its intermediate-term uptrend will remain intact.

Investors can hold the stock with a stop-loss at ₹165 levels. Subsequent supports below ₹170 are at ₹150 and ₹130.

Please discuss the outlook for NHPC & Jaiprakash Power

Rajesh Reddy

NHPC (₹22.5): The long-term trend in NHPC has been down since its September 2009 high of ₹39. The stock failed to surpass its significant resistance band between ₹28 and ₹30 during February 2013 and June 2014.

This resistance zone is a key trend deciding level for NHPC. Only a conclusive breach of this level will alter the long-term downtrend and take the stock higher to ₹33.5 and then to ₹39.

But the stock is now in a short-term downtrend. An emphatic fall below the immediate support at ₹22 will pave way for a further drop to ₹20 and then to ₹18 in the short- to medium-term. A decisive close below the significant long-term support level of ₹18 will drag the stock down to ₹15 eventually.

Jaiprakash Power Ventures (₹18.5): The stock lost momentum while testing the significant long-term resistance level at ₹26 in late May and early June 2014 and started to trend lower.

Since then, the stock has been on a short-term downtrend. It breached its key support at ₹21 last month.

Nevertheless, the stock is hovering just above its immediate support and 200-day moving average at ₹17.5.

A further sell-off in the stock can trigger a decisive fall below ₹17.5. The stock can then plunge to ₹15 or even to ₹13 in the medium- to long-term. To alter the bearish trend, the stock has to conclusively break through its key resistance at ₹26 to move up to ₹30. The next key resistances are at ₹35 and ₹40.

Send your queries to techtrail@thehindu.co.in

Published on August 03, 2014
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