Technical Analysis

Coal India in recovery mode

Yoganand D | Updated on June 16, 2019 Published on June 16, 2019

A break above ₹300 will alter the downtrend and take the stock up to ₹350 over the long run

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

I bought Coal India early this year. It fell initially but recovered later. Should I hold on for more gains or book profit?

K Indira

Coal India (₹254.9): The stock of Coal India has been in a long-term downtrend since encountering key long-term resistance at ₹447 in September 2015. Intermediate-term trend is also down for the stock. However, since recording a new low at ₹212 in February 2019, the stock has been on a medium-term uptrend. Short-term trend is also up.

 

While trending up, the stock had decisively breached key resistance at ₹250 and continued to trend up. It is in a recovery mode. But the stock appears to have encountered next resistance at ₹270 last week, and declined 3.8 per cent. The stock can now test support at ₹250, where the 200-day moving average is also poised. A decisive fall below this support will be cue for partially booking profit and re-entering the stock at lower levels.

Such a decline can drag the stock down to ₹240 and ₹230 levels in the short to medium term. Next support is at ₹215. Investors with a long-term horizon can consider buying in declines with a stop-loss at ₹215. A strong rally above ₹270 will pave way for an up-move to ₹290 or ₹300 in the medium term.

A decisive break above ₹300 will alter the intermediate-term downtrend and take the stock up to ₹320 and ₹340 and ₹350 levels over the long run. To alter the long-term downtrend, the stock needs to conclusively move above ₹350. In that case, an up-move to ₹370 and ₹400 is possible.

Is J&K Bank a good stock to buy with a one year perspective?

Swamynathan S

Jammu & Kashmir Bank (₹42.3): The stock of Jammu & Kashmir Bank (J&K Bank) had plummeted 28.7 per cent last week, breaking below a key support level of ₹50. It is in a downtrend across all-time frames — short, medium and long term. The stock can extend the downtrend and test the key long-term support in the band between ₹35 and ₹38. An upward reversal from this support range can take the stock up to ₹46 and ₹50 levels.

 

Investors with a long-term view can purchase at lower levels with a long-term stop-loss at ₹33. They can average at lower levels as well. A strong break above ₹53 will alter the short-term downtrend and take the stock higher to ₹59 and ₹65 levels. Consider booking profit if the stock fails to move beyond ₹65, which is a significant long-term resistance to note. Subsequent resistances are pegged at ₹74 and ₹85 levels. On the downside, if the stock tumbles below ₹35, it can decline to ₹30 and ₹24 over the long term.

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Published on June 16, 2019
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