Technical Analysis

Cholamandalam Finance consolidates

Yoganand D | Updated on September 08, 2019 Published on September 08, 2019

A break-out of the resistance at ₹310 will take the stock up to ₹350 in the long run

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

I am a long-term investor and have purchased Chola Finance and Goodyear India. What is the technical outlook for these two companies?

Rabinder Sikand

Cholamandalam Investment and Finance Company (₹269.3): Following a strong rally from 2014 until early 2018 high of ₹352 (stock-split adjusted), the stock changed direction and began to decline.

Undergoing a medium-term corrective downtrend, the stock found support at around ₹220 in October 2018. Since then, it has been in a sideways consolidation phase in a wide range between ₹220 and ₹310. This July, the stock took support in the ₹220-230 zone and began to trend up.

The stock currently tests a crucial resistance area at ₹275. An emphatic break above this barrier will pave way for an up-move to ₹290 and ₹310 levels in the medium term.

A further break-out of the long-term resistance level of ₹310 will strengthen the long-term uptrend and take the stock up to ₹325 and ₹350 in the long run. Inability to move beyond ₹310 will keep the sideways movement intact.

On the downside, if the stock falls below the key immediate support level of ₹245, it can bring back selling interest and drag the stock down to the lower boundary of the sideways range at ₹220. Investors with a long-term perspective can buy in declines and hold the stock with a stop-loss at ₹195.

A strong plunge below ₹200 can pull the stock down to ₹180 and ₹160 levels. Next vital long-term support for the stock is placed at ₹145. You can average the stock in declines with a stop-loss at ₹195.

Goodyear India (₹921.6): One leg of the long-term uptrend in the stock of Goodyear India came to a halt in May 2018, when the stock registered a new high at ₹1,298.

Since then, it has been in an intermediate-term downtrend. But it found support at ₹800 in late July this year and staged a trend reversal, triggered by positive divergence in the daily indicators. The stock has been in a nascent short-term uptrend since then. But it tests the 200-day moving average and faces a vital medium-term resistance ahead at ₹965.

 

 

A clear break-out of this level will strengthen the short-term uptrend and push the stock up to ₹1,000.

A further rally beyond ₹1,000 can take the stock higher to ₹1,050 and ₹1,100 levels.

Only an emphatic breakthrough of ₹1,100 is needed to alter the intermediate-term downtrend and take the stock up to ₹1,200 and ₹1,300 over the long term. You can continue to accumulate the stock with a stop-loss at ₹790.

Conversely, a plunge below the key base level of ₹800 will reinforce the downtrend and drag it lower to ₹750 and ₹700 in the medium term.

Send your queries to [email protected]

Published on September 08, 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.