Technical Analysis

Hindustan Zinc going strong

Yoganand D | Updated on January 17, 2018 Published on July 03, 2016





The stock is in an uptrend across all time-frames, rising 4.5 per cent last week

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

I have shares of JSW Energy & Hindustan Zinc. I want to buy some more shares of these two companies. Can you brief me on the technicals of these companies.

Raajesh Reddy

JSW Energy (₹83.1): The stock of JSW Energy found support at around ₹60 in August 2015 and February 2016 and reversed upwards on both occasions. Since this February, it has been on a medium-term uptrend.

A key long-term resistance at ₹74 was emphatically breached with the stock surging 16 per cent in the first week of June, extending its up-move. It trades well above its 50- and 200-day moving averages.

However, the stock faces a significant resistance at ₹85 that occurs at the 38.2 per cent Fibonacci retracement of its prior downtrend that commenced in March 2015. An emphatic breakthrough of the immediate resistance at ₹85 can strengthen the uptrend and take the stock higher to ₹93 in the short term.

To alter the intermediate-term downtrend, the stock needs to conclusively breach the key resistance as well as 50 per cent retracement level at ₹93. Such a break-out can pave the way for an up-move to ₹105 and then to ₹120 in the long term.

You can make use of corrective declines to accumulate the stock while maintaining a stop-loss at ₹69. Strong fall below ₹79 can pull the stock down to ₹74 in the short term.

But a conclusive fall below ₹74 will mar the uptrend and drag the stock down to ₹70 and then to ₹65 levels. The stock has a significant long-term support at around ₹60 which can cushion the stock on a decline below ₹65.

Hindustan Zinc (₹177.4): Following a sharp fall, the stock took support at around ₹110 in August 2015 and reversed direction. It has been on an intermediate-term uptrend since then. While trending up, it has emphatically breached key resistances at ₹155 in late March and continued its upward journey. It is in an uptrend across all time frames — long, medium and short-term. Gaining bullish momentum, the stock climbed 4.5 per cent last week.

However, it faces a key resistance at ₹180. The short-term outlook is bullish for the stock.

A decisive breach of this barrier can push it higher to ₹200 and ₹220 in the short to medium term. Strong decline below the immediate support at ₹168 can pull it down to ₹160 in the short term.

Further fall below ₹160 will mitigate the short-term uptrend and pull the stock down to ₹155 or ₹145 thereafter. You can also accumulate the stock on declines while maintaining a long-term stop-loss at the level of ₹140.

I have shares of Bata bought at ₹520. Should I hold or book profits?

R C Bhatia

Bata India (₹549.1): Significant resistance in the band between ₹600 and ₹620 limited the stock's rally in August 2015 and May 2016.

The stock continues to be in an intermediate-term downtrend that started from the January 2015 peak at ₹747. Nevertheless, a medium-term uptrend that began from this January low at ₹438 is still in place.

A conclusive break through the aforesaid resistance band will alter the downtrend and take the stock up to ₹650 and ₹670 levels in the medium term. Further rally beyond ₹670 can take the stock to ₹700 and ₹720 in the long run.

Having said that, a slump below the immediate support at ₹520 will pose a threat to the uptrend and pull the stock down to ₹500 and then to ₹460 in the medium term. Investors with a medium-term view can hold the stock with a stop-loss at ₹510.

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Published on July 03, 2016
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