Technical Analysis

HDFC is at a critical point

Yoganand D | Updated on January 23, 2018 Published on May 03, 2015




The stock is poised just above its key medium-term support of ₹1,150

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

I hold HDFC bought at ₹1,344. Shall I hold it?

BP Kohil

HDFC (₹1,169.4): After encountering a key resistance at ₹1,400 in March 2015, the stock of HDFC changed direction. Last month, it tumbled almost 11 per cent. Short-term trend has been down for the past two months. However, the stock is poised just above a significant medium-term support level of ₹1150.

This level can provide short-term support for the stock. But a decisive fall can pull it down to ₹1,070 or ₹1,050 in the medium term.

Having said that, the stock’s intermediate-term uptrend that has been in place from the August 2013 low of ₹632, will hold as long as the stock trades above the key support range of ₹975 and ₹1,000. You can consider averaging at lower levels with a stop-loss at ₹975 levels. An upward resumption can take the stock higher to ₹1,260 and then to ₹1,400 in the long term.

Please let me know the reason for the sharp fall in share price of Amtek India bought at ₹135. Should I hold it, add or sell?

Ajit D Nair

Amtek India (₹105.25): The stock marked a new high at ₹137 in June 2014. It then reversed direction and began to decline. This downtrend accelerated, breaking multiple supports.

Nevertheless, the stock found support at around ₹40 in March 2015 and changed its trend. Since then, it has been trending upwards backed by good daily volumes. While moving up, the stock decisively breached key resistances at ₹70 and ₹90.

But this rally appears to be stretched as the stock's daily indicators and oscillators feature in the overbought levels. At this stage, a corrective decline can't be ruled out. Such a decline can find support at ₹90 or at ₹80 in the short term. Subsequent upward resumption can push the stock higher to ₹120 and then to ₹140 levels in the long term. Therefore, accumulate the stock on corrective declines with a stop-loss at ₹70.

Please advise on whether to hold or exit the stock of L&T Finance Holdings bought at ₹79.

K Ramachandran

L&T Finance Holdings (₹63.2): Since November 2013, the stock has been in a sideways consolidation phase in the wide range between ₹63 and ₹83.

Currently, the stock is testing the lower boundary with negative bias. As you have purchased at around the upper boundary, you can wait and average the stock at lower levels with a stop-loss at ₹50.

A decisive fall below the lower boundary can pull the stock down to its long-term support zone between ₹53 and ₹55 which can provide base.

An upward reversal from these support levels can take the stock higher to ₹75 and then to ₹83 in the medium to long-term. Key long-term resistance above ₹83 is at ₹97.

I hold shares of Rolta India purchased at ₹64. Please guide me on whether to hold or exit.

SM Desai

Rolta India (₹115.4): The stock of Rolta India has been on a sharp decline since marking a multi-year high at ₹196 in late February 2015. This fall has completely wiped out February’s gains. While declining, the stock has decisively breached its 50- and 200-day moving averages as well as key supports.

Further decline below the key support level of ₹103 will strengthen the ongoing downtrend and pull the stock down to the level of ₹90 and then to ₹80 in the medium term.

You can consider taking profits off the table at this juncture and re-entering at lower levels. To alter the downtrend, the stock needs to rally above ₹140 for an up move to ₹155 and ₹165 levels.

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Published on May 03, 2015
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