Technical Analysis

BEL faces crucial resistance ahead

Yoganand D | | Updated on: Nov 18, 2018
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A break above ₹100 will strengthen the uptrend and take the stock up to ₹120

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

I bought shares of Bharat Electronics (BEL) at ₹155. What is the future outlook?

VNG Pillai, Satyanarayana GS

Bharat Electronics (₹93.1): The stock of BEL has been on an intermediate-term downtrend since recording a new high at ₹192.9 in November 2017. While trending down, it breached key supports at ₹125 and ₹100, which have turned into significant resistances.

However, the stock found support after registering a 52-week low at ₹74.3 on September 25, 2018. Taking support in the ₹74-77 band, it changed direction, triggered by positive divergence in the daily indicators, such as relative strength index and price rate of change. Since then, the stock has been in a short-term uptrend.

It is hovering well above its 21- and 50-day moving averages. But the stock faces a key medium-term resistance ahead at ₹100. Breakthrough of this barrier will strengthen the uptrend and take it higher to ₹113 and ₹120 in the medium term. Inability to surpass the psychological barrier of ₹100 can drag the stock down to ₹88 and ₹80 levels in the near term.

Subsequent key support in the ₹74-77 band could provide a base once again on a fall below ₹80. Investors with a long-term perspective can buy the stock during declines with stop-loss at ₹70. You can consider averaging the stock with a stop-loss at ₹80. An upmove beyond ₹120 will strengthen the bullish momentum. To alter the intermediate-term downtrend, the stock needs to conclusively move above ₹135. Next targets are ₹150 and ₹165. Consider taking partial profits at ₹120.

What do technical charts say about the stocks of NCC and Manappuram Finance?

Abhaya Kumar

NCC (₹87.8): The stock has been on a medium-term downtrend since encountering a key resistance at ₹136 in May 2018. But it reversed direction after taking support at ₹63 in late October. The near-term trend is up. The stock is testing a key medium-term resistance at ₹90 and facing difficulty in surpassing this level.

A strong break above this barrier will strengthen the uptrend and take the stock up to ₹100 and ₹105.

Only a decisive breach of ₹105 will alter the downtrend and take the stock higher to ₹120 and ₹127 levels in the medium term. However, a plunge below the immediate support level of ₹80 can reinforce the downtrend and drag the stock down to ₹70 or even ₹65 in the medium term.

Manappuram Finance (₹85.9): Following an intermediate-term downtrend, the stock took support at ₹66 in early October this year. It has been on a short-term uptrend since then. However, it tests a crucial resistance at ₹86 now.

A strong rally above this level will strengthen the uptrend and take the stock higher to ₹95 and ₹100 in the short term. But to alter the downtrend, the stock needs to emphatically break above the trend-deciding level of ₹100.

Such a break will pave the way for an upmove to ₹110 and ₹120 over the medium term. Key supports below ₹75 are placed at ₹66 and ₹60. Investors with a long-term horizon can hold the stock with a stop-loss at ₹65.

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Published on November 18, 2018

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