Technical Analysis

Don’t stick to Pidilite Industries

Yoganand D | Updated on January 23, 2018 Published on April 19, 2015

BL20PIDILITE   -  Bijoy Ghosh

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After hitting a new high last month, the stock is now struggling to move higher



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

Please recommend the one-year technical outlook for SML Isuzu and Pidilite Industries.

P Deshpande

Pidilite Industries (₹591.6): This stock is on an uptrend across all-time frames — long, medium and short-term. But it began to move sideways after recording a new high at ₹637 in mid-March 2015. Investors can consider booking profits at this point and avoid taking fresh long positions until clear bullish signs emerge.

The indicators and oscillators on the weekly chart show signs of trend reversal. A drop below the immediate support level of ₹575 can pull the stock down to ₹535 or ₹500 levels in the short term. Further decline below ₹500 can mitigate the medium-term uptrend and pull the stock down to the ₹450-460 zone.

The long-term uptrend will remain intact as long as the stock trades above the support zone of ₹400-₹420. Investors with a long-term horizon can hold the stock with a stop-loss at ₹380. Strong rally above ₹620 can push the stock higher to ₹650 and then to ₹700 in the long run.

SML Isuzu (₹1,466.5): The stock found support at around ₹220 in November 2013 and bottomed out. Since then, it has been on an uptrend across time frames — long, medium and short-term.

However, after registering an all-time high at ₹1,670 early this month, the stock started to move sideways. The relative strength index on the daily chart displays negative divergence implying that a short to medium-term trend reversal is on the cards.

The indicators on the weekly and monthly charts hover in the over-bought levels too, signifying that the stock is on the brink of a downward reversal. Therefore, investors holding the stock can consider taking profits off the table at this juncture.

A fall below the immediate support at ₹1,400 can pull the stock down to ₹1,200 or ₹1,100 levels. A strong fall below the significant base level of ₹1,100 will mar the medium-term uptrend and drag the stock down to ₹1,000 and then to ₹900 levels.

Next key supports are pegged at ₹800 and ₹600. Resistances to note are at ₹1,535 and ₹1,670.

I bought Ashok Leyland at ₹67. Can I hold? Please tell me the one year target.

Rajendran N

Ashok Leyland (₹72.9): The stock of Ashok Leyland found support and turned around from its August 2013 low of ₹11.8. Since then, it has been on an uptrend. Both intermediate and medium-term trends are up for the stock.

But it encountered a key resistance at ₹76 in early March this year and has been consolidating sideways between ₹66 and ₹76. Last week, the stock hit the resistance and reversed down. There is a possibility of the stock declining to test the support at ₹66 in the ensuing weeks as the indicators on the weekly chart are deteriorating. Consider booking profits now and re-entering later.

A decisive fall below the lower boundary of ₹66 can alter the short-term trend to negative and the stock can slip further to ₹60 and then to ₹56 in the medium term. Subsequent key supports for the stock are placed at ₹50 and ₹45.

The long-term trend will remain up as long as the stock trades above ₹45 levels. On the upside, an emphatic breakthrough of the upper boundary at ₹76 can push the stock northwards to ₹80 or ₹86.

Please give your short, medium and long term outlook for Adani Power.

Vivek Koul

Adani Power (₹47.4): In early March, the stock of Adani Power encountered a key long-term resistance at ₹60 and resumed its downtrend. It has been on a short-term downtrend since then.

Long and medium-term trends are also down for the stock. The stock trades well below its 50 and 200-day moving averages. Immediate support at ₹46 provided a base in late March, but this could fail to hold the stock's decline this time.

A conclusive break of this support is possible in the near future and the stock can decline to ₹40.

Next supports at ₹35 and ₹32 can come to the rescue. Conversely, a strong rally above ₹53 can take the stock higher to ₹60. To alter the intermediate-term downtrend, the stock needs to break the significant resistance level of ₹60 for an up move to ₹66 and ₹70.

Send your queries to techtrail@thehindu.co.in

Published on April 19, 2015
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