Technical Analysis

Asian Paints loses colour

Yoganand D | Updated on August 26, 2019 Published on August 25, 2019

Wait for correction before considering to buy at lower levels

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

I want to buy Asian Paints. Is this the right time to start an SIP in this stock, I have a 2-5- year view for this investment.

Sudhin B

Asian Paints (₹1,579.7): The stock of Asian Paints has been resilient over the past two months, and has moved up, against despite the decline in the bellwether indices.

It is in an uptrend across all-time frames — long-, medium- and short-term.

Following a corrective decline in April this year, the stock took support at ₹1,300 in May as well as in July and began the trend upwards. While trending up, it decisively breached the 200-day moving average, a key resistance at ₹1,400 in late July.

 

 

The stock, thereafter, accelerated and recorded a new high at ₹1,609 recently and started to take a breather by moving sideways. It hovers well above the 50- and 200-day moving averages.

The short-term uptrend has been up since the stock took support at ₹1,300 in early July, but this trend is now weakening.

The stock is displaying negative divergence in the daily relative strength index and in daily price rate of change indicator, which imply that trend reversal is in the offing.

Besides, there has been a decrease in daily volume over the past month. Hence, investors should tread with caution in the short term and consider booking partial profits at this juncture.

The Systematic Investment Plan (SIP) approach on the stock could help eliminate the risk of timing it and average out the benefits. However, wait for the correction, and you can start buying at lower levels.

A fall below the immediate support can initially drag the stock down to ₹1,400, and a further decline below this level might extend the down-move to ₹1,300 over the medium term. Subsequent key supports for the stock are at ₹1,200 and ₹1,150. A long-term base is pegged at ₹1,100. Investors with a long-term horizon can stay invested with a stop-loss at ₹1,070.

A strong rally above ₹1,600 can take the stock northwards to ₹1,700 and ₹1,800 in the medium term.

Please comment on the prospects of Snowman Logistics?

Anish Jose

Snowman Logistics (₹28.3): The stock is in a downtrend in all-time frames. Within the downtrend, it has been in a broad sideways consolidation phase in the band between ₹26 and ₹39 since September 2018.

A downward break of ₹26 can drag the stock down to ₹23 and ₹20 in the medium term. On the upside, there is an immediate resistance at ₹31 and a rally above this level can extend the corrective upmove to ₹35.

 

 

 

An emphatic break-out of ₹35 can push the stock higher to the upper boundary at ₹39 over the medium term. That said, to alter the medium-term downtrend and bring some bullish momentum, the stock needs to decisively break above ₹39 to take it higher to ₹45 and ₹50 in the long run.

Send your queries to [email protected]

Published on August 25, 2019
  1. Comments will be moderated by The Hindu Business Line editorial team.
  2. Comments that are abusive, personal, incendiary or irrelevant cannot be published.
  3. Please write complete sentences. Do not type comments in all capital letters, or in all lower case letters, or using abbreviated text. (example: u cannot substitute for you, d is not 'the', n is not 'and').
  4. We may remove hyperlinks within comments.
  5. Please use a genuine email ID and provide your name, to avoid rejection.