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 techtrail@thehindu.co.in

Published on September 08, 2019

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