Technical Analysis

HCL Technologies witnesses selling pressure

Yoganand D | Updated on October 21, 2018 Published on October 21, 2018

The stock recently slipped below its 21- and 50-day moving averages

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

What is the long- as well as the short-term view on HCL Technologies?

Janardhanan

HCL Technologies (₹960.7): The stock of HCL Technologies tumbled 6 per cent on Friday, decisively breaching a key support at ₹1,000. One leg of the long-term uptrend that had commenced from the key base level of ₹710 in July 2016 appears to be have come to an end this September.

After recording a new high at ₹1,124.5 in late September, the stock changed direction, triggered by negative divergence in the daily indicators. Since then, it has been on a short-term downtrend. While trending down, the stock breached key supports at ₹1,050 and ₹1,000.

 

 

Moreover, the stock breached its 21- and 50-day moving averages recently, and hovers well below them. The daily indicators feature in the negative territory, backing the short-term downtrend. The weekly indicators are also charting downwards. However, the stock currently tests a key support at ₹950 and its 200-day moving average.

The selling pressure at higher levels, coupled with a lack of bullish momentum, indicates a bearish short-term outlook for the stock. It can breach the current support and decline to ₹880, which is a significant long-term base. A further plunge below this level can threaten the long-term uptrend and drag the stock down to ₹850 and ₹830 levels in the medium to long term. The subsequent supports are at ₹800 and ₹750. You can consider taking partial profits at this juncture and buying at lower levels, with a stop-loss at ₹790.

I hold IDBI Bank shares purchased at ₹130 each. Please give your forecast.

NV Srinivas

IDBI Bank (₹59.4): A significant long-term support in the band between ₹47 and ₹50 has been consistently cushioning the stock since early 2016. Recently, the stock took support from this base and bounced up strongly.

But, the stock now tests a resistance at ₹60 with a positive bias. An emphatic breakthrough of this level can take the stock higher to ₹70 in the short term. A future rally beyond ₹70 can take the stock to ₹80 and then to ₹90 in the long term. Nevertheless, the stock needs to conclusively break above the vital long-term barrier at ₹90 to alter the broad consolidation phase and take it higher to ₹100 and ₹112 levels.

 

 

You can consider averaging on declines, with a stop-loss at ₹46, and book profit in rallies. That said, a plunge below ₹47 will bring back selling pressure and drag it down to ₹44 and ₹40 levels.

What are the long- and short-term views on Ingersoll-Rand India?

Sivakumar

Ingersoll-Rand India (₹508.9): The stock has been in a broad sideways consolidation phase in the band between ₹470 and ₹700 since September 2015. The long-term trend will remain sideways as long as the stock is range-bound. A break above ₹700 or a break below ₹470 will set a new direction for the stock.

A plunge below ₹470 can drag the stock down to ₹440 and ₹400 in the medium term, while a strong break above ₹700 will take the stock higher to ₹750 and ₹800.

 

The short-term trend is down. The immediate support is at ₹500 and resistance at ₹550. A rally above ₹550 will alter this trend and take the stock higher to ₹600 and ₹635 levels.

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Published on October 21, 2018
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