Technical Analysis

GlaxoSmithKline Pharma in good health

Yoganand D | Updated on January 23, 2018 Published on April 12, 2015

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The stock’s long-term uptrend will continue as long as it trades above the ₹1,850-2,000 band



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

What is the medium and long-term technical outlook for the stock of GSK Pharma.

Panini Deshpande, Ashok Bedi

GlaxoSmithKline Pharmaceuticals (₹3,314.2): The stock of GlaxoSmithKline Pharmaceuticals has been on a long-term uptrend since taking support at ₹800 in early 2008. This will continue as long as the stock trades above the significant support band between ₹1,850 and ₹2,000. Investors with a long-term horizon can hold the stock with a stop-loss at ₹1,850 levels. The intermediate-term trend is also up for the stock.

However, after registering a new high at ₹3,550 in late January this year, the stock has been on a sideways consolidation move between ₹3,050 and ₹3,500.

The medium- to intermediate-term uptrend will remain in place as long as the stock trades above the significant support level of ₹2,900. Investors with a medium-term perspective can consider holding their long positions with a stop-loss at this level. Only an emphatic fall below this level will mar the uptrend and pull the stock down to ₹2,650 and then to ₹2,400 levels in the medium term.

A fall below the immediate short-term key support of ₹3,240 can pull the stock down to the lower boundary of the sideways range at ₹3,050 levels. On the upside, a conclusive breakthrough of ₹3,500 can take the stock higher to ₹3,800 levels in the long term.

I bought Karnataka Bank at ₹155. Please advise on the outlook for the stock.

Rajiv Shaw

Karnataka Bank (₹128.3): You have purchased the stock at around the key resistance level of ₹157. The stock tested this resistance in early December 2014 and then reversed downwards in late January.

Since then, the stock has been on a short-term downtrend. However, it found support at a significant base at ₹118 recently and bounced back.

But, failure to rally above ₹135 can pull the stock down once again to ₹118 levels. Further fall below this level can pull the stock down to ₹110 levels. You can make use of these support levels to average with a stop-loss at ₹106.

A strong breakthrough of the significant resistance at ₹135 can take the stock higher to ₹150 and ₹157 levels in the medium term. The stock needs to decisively break ₹157 for an up move to ₹180 in the long term.

I have bought Arvind Remedies at ₹24. But the stock price has fallen since then. Please advise if I should hold or sell it?

KV Rajendran Nair

Arvind Remedies (₹21.19): After marking a multi-year high at ₹66 in September 2014, the stock reversed direction and fell non-stop until it found support at ₹10 in late March 2015.

However, it did a volte-face and rallied sharply breaking key resistances at ₹15 and ₹20. The stock’s ongoing rally is backed with good daily volumes. It has almost bounced back to your purchase price. As the stock faces a key resistance at ₹25, there could be minor corrective declines. You can make use of the these dips to average and then book profits as early as possible.

Strong rally beyond ₹25 can push the stock northwards to ₹30 in the short- to medium-term. But the stock needs to decisively breach its significant long-term resistance level of ₹30 for a further rally to ₹35 or ₹38 levels in the long run.

On the downside, a decisive plunge below the support level of ₹15 can pull the stock down to ₹10 in the medium term. Next key supports are pegged at ₹8 and ₹6.5 levels.

What is the outlook for Alkyl Amines Chemicals?

P. Ravi

Alkyl Amines Chemicals (₹335.3): After a corrective fall, the stock moved towards the 38.2 per cent fibonacci retracement level of the prior uptrend and found support at ₹280 in late March 2015.

The stock then bounced back smartly. It now tests a key hurdle at ₹350 levels. A decisive breakout of this level is needed to strengthen the long-term uptrend and take the stock higher to the ₹400-410 band in the coming months.

Inability to breach this resistance can pull the stock down to ₹320 or ₹300 levels. Next key supports are at ₹280 and ₹240. The long-term uptrend will remain in place as long as the stock hovers above ₹240 levels.

Send your queries to techtrail@thehindu.co.in

Published on April 12, 2015
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