Technical Analysis

Glenmark Pharma losing potency

Yoganand D | Updated on January 20, 2018 Published on June 12, 2016

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A fall below ₹760 can drag the stock down to ₹700 or ₹670 levels in the medium term



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

I have Bosch at ₹26,365 and Glenmark Pharma purchased at ₹756. Should I buy or hold?

R C Bhatia

Bosch (₹21,487.3): Ever since recording an all-time high at ₹27,989 in March 2015, the Bosch stock has been on an intermediate-term downtrend. Key resistance at ₹26,500 capped its rally in August and the stock resumed its downtrend with sharp declines.

However, the stock found support at around ₹16,000 this February and reversed higher. The subsequent rally was a strong one that breached a key resistance at ₹20,500 and retraced 50 per cent fibonacci retracement of the prior downtrend.

But the key resistance in the band between ₹22,000 and ₹22,500 limited this up-move recently and the stock is under selling pressure.

The near-term outlook for the stock is bearish. The stock can extend its decline and test its immediate support at ₹20,500.

Further declines can find support at ₹19,000, which is a key trend-deciding level. Any upward reversal from these supports can once again take the stock higher to ₹22,500. You can consider averaging the stock at lower levels with a stop-loss at the level of ₹18,500.

To alter the intermediate-term downtrend and strengthen the bullish momentum, the stock needs to emphatically breakthrough ₹22,500 level for an up-move to ₹23,600.

Next key medium-term resistances are pegged in the band between ₹26,000 and ₹26,500. However, a strong plunge below ₹19,000 can drag the stock down to ₹17,500 or even ₹16,000.

Glenmark Pharmaceuticals (₹774.1): The long-term uptrend in the stock of Glenmark Pharma continues to be intact. After retracing 50 per cent fibonacci retracement of this primary uptrend, the stock found support at ₹670 in February 2016 and resumed its uptrend.

But the resulting uptrend has failed to sustain the bullish momentum and encountered a resistance at ₹892 in late May. The stock has tumbled 11.5 per cent in the last couple of weeks, which has almost eroded your profit.

Currently, it tests a support at ₹760. A conclusive fall below this level can drag the stock down to ₹700 and then to ₹670 levels in the medium term. So, you can consider exiting the stock now and re-entering at lower levels with a long-term stop-loss at the level of ₹650.

A decisive break-out of the resistance zone between ₹890 and ₹900 will indicate resumption of the uptrend and take the stock higher to ₹1,000 and then to the ₹1,090-₹1,100 band in the long run.

On the downside, a strong plunge below the long-term support at ₹670 will mar the uptrend and drag the stock down to ₹600 or even to ₹550 levels.

I have bought Spicejet at ₹65. What is the future for the stock?

T V K Sankaran

Spicejet (₹63.7): In October 2015, the stock broke out of a vital resistance at ₹30 and began to accelerate.

The stock touched ₹95 this January and reversed trend, triggered by negative divergence in the weekly chart. After testing resistance at ₹85 in mid-May, it continued to decline. However, it now finds support at ₹60 and tests this level.

A slump below this level will strengthen the downtrend and drag the stock down to ₹50 in the medium term. Further declines can pull the stock down to ₹42 and then to ₹30 in the long term. But an upward reversal from its immediate support at ₹55 and ₹50 can take the stock higher to ₹70 and then to ₹85 levels.

You can make use of declines to accumulate with a stop-loss at ₹47. An emphatic breakthrough of ₹85 is needed to reinforce the bullishness and take the stock higher to ₹95.

Send your queries to techtrail@thehindu.co.in

Published on June 12, 2016
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