Your Stock Portfolio. Dr Reddy’s in a sideways movement

Dr Reddy’s is range-bound

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

I bought shares of Dr Reddy’s at a price of ₹3,325. Should I hold or sell?

Neelam Mayani

Dr Reddy's Laboratories (₹3,160.7): Since encountering a key resistance at around ₹4,350 in August and again in October 2015, the stock has been on an intermediate-term downtrend. In July 2016, the stock failed to move beyond a key resistance at around ₹3,600 and nose-dived more than 18 per cent in the last week of July.

The stock subsequently found support at ₹2,950 and has been on a sideways consolidation phase in the wide range between ₹2,950 and ₹3,330 since then. Last week, the stock rose 3.4 per cent, witnessing buying interest. But it faces immediate resistance at ₹3,200. Conclusive move beyond this level can take the stock higher to ₹3,330 levels.

Further breakthrough of ₹3,330 is required to alter the medium-term sideways movement and take the stock higher to ₹3,500 and ₹3,700 levels. Strong up-move beyond ₹3,700 levels is needed to change the intermediate-term downtrend and push the stock northwards to ₹4,000 and ₹4,300 in the long term. On the downside, if the stock plunges below the lower boundary of ₹2,950, the selling pressure can build, and the stock can decline to test support at ₹2,850. Decisive tumble below ₹2,850 can reinforce the intermediate-term downtrend and pull the stock down to ₹2,650 and then to ₹2,500. You can hold the stock with a long-term stop-loss at ₹2,850.

I purchased UFO Moviez stock during IPO, could you please provide your view.

Shashidhar B

UFO Moviez India (₹415.1): Since encountering a key resistance at around ₹640 in August 2015, the stock of UFO Moviez has been on a long-term downtrend. Both medium as well short-term trends are down for the stock. However, the stock now trades just above its long-term support band between ₹390 and ₹400. A decisive slump below this band can pull the stock down to 380 and then to new lows in the medium term. Investors with a long-term perspective can stay invested with a stop-loss at ₹390.

An upward reversal from the current support band can take the stock higher to ₹445, which is the key short-term resistance level to note. Further rally beyond this level can push the stock higher to ₹480 and then to ₹510 in the medium term. Only a strong breakthrough of the significant long-term resistance at ₹510 will alter the downtrend and take the stock higher to ₹550 and then to ₹600 in the long run. You can consider averaging on a strong rally above ₹440 level and exit the stock if it fails to move beyond ₹510 levels.