Technical Analysis

Divi’s Laboratories faces a key barrier

Yoganand D | Updated on January 02, 2021 Published on January 02, 2021

The short-term outlook is negatively biased

What is the short-term outlook for Divi’s Laboratories? I would like to buy for a short-term horizon.

Ashish Pathrabe

 

Divi’s Laboratories (₹3,846.9): The stock of Divi’s Laboratories has been on a long-term uptrend since bottoming out from the 2017 low of ₹533. Medium as well as the short-term trend are up for the stock. In July 2020, the stock breached a key resistance at ₹2,500 and continued to trend upwards. On Friday, the stock registered a new high at ₹3,867 levels and paused. It faces a key resistance ahead at ₹4,000. Also, the daily as well as the weekly relative strength indices are displaying negative divergence, implying that trend reversal is on the cards.

Further, the monthly RSI is featuring in the overbought territory, implying that corrective decline is likely. An emphatic fall below the key support level of ₹3,600 will mar the short-term uptrend, bring back selling interest and drag the stock down to ₹3,350 levels. Next key supports below ₹3,350 are placed at ₹3,200 and ₹3,000. A conclusive plunge below ₹3,000 will alter the medium-term uptrend that commenced from last July low of ₹2,094 levels.

The long-term uptrend will remain intact as long as the stock trades above the significant support level of ₹1,600. Investors with a long-term perspective can stay invested with a stop-loss at ₹1,570. Key supports below ₹2,800 are placed at ₹2,400 and ₹2,200 levels. On the upside, a conclusive break above the immediate resistance level of ₹4,000 will reinforce the uptrend and take the stock northwards to ₹4,200 and then to ₹4,400. The short-term outlook is negatively biased, so you can wait and buy at lower levels after a corrective decline.

How will the stock of Sundram Fasteners perform in the next 12 months?

Santosh

 

Sundram Fasteners (₹522.9): The stock has been on an intermediate-term uptrend since it took support in March last year at ₹249 levels. After a corrective decline, it took support at ₹400 in the months of September and October 2020 and continued to trend upwards. However, the stock began to decline recently after registering a 52-week high at ₹585 on December 18, 2020. Significant long-term resistance in the band between ₹585 and ₹600 could limit the upside temporarily. A conclusive fall below the immediate base level of ₹500 will weaken the short-term uptrend and drag the stock down to ₹470 and then to ₹440. A further plunge below the second base level of ₹400 can pull the stock down to ₹400, which is a crucial long-term base to note. The intermediate-term uptrend will remain in place as long as the stock trades above ₹400. Key supports below ₹400 are placed at ₹330 and ₹300. On the other hand, a conclusive breakthrough of ₹600 is needed to take the stock higher to ₹700 and then to ₹750 over the long term. Investors with a long-term horizon can remain invested with a stop-loss at ₹380.

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Published on January 02, 2021
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