Technical Analysis

JK Tyre in a consolidation phase

Yoganand D | Updated on January 20, 2018 Published on June 05, 2016

5ILFSTrans_Co.eps

5JKTyre_col.eps

5NCC_COL.eps





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

I have shares of JK Tyre bought at an average price of ₹88. What is the outlook for the stock?

Murali

JK Tyre and Industries (₹86.3): The stock of JK Tyre and Industries decisively broke out of a significant resistance at ₹65 in September 2014.

Subsequently, it accelerated sharply and registered an all-time high at ₹162.9 in mid-December 2014. Since then, the stock has been on an intermediate-term downtrend.

However, the significant support at around ₹78 provided base for the stock in late February this year.

After whipsaws below ₹78, the stock bounced back and has been on a sideways consolidation phase in the band between ₹78 and ₹88. Last week, the stock surged about 4 per cent. It now tests a resistance band between ₹88 and ₹90. A conclusive breakthrough of this band will alter the short-term trend from sideways to bullish. The stock can then trend higher to ₹100 and ₹105 levels in the short term. Decisive rally beyond ₹105 can see the stock target ₹120 and ₹130. To alter the intermediate-term downtrend, the stock needs to breach the vital resistance level at ₹130 for an up-move to ₹150 and ₹160 levels.

Investors with a long-term perspective can stay invested with a stop-loss at ₹78. On the other hand, inability to move beyond ₹90 can retain the stock’s sideways movement.

A downward breakthrough of ₹78 will strengthen the downtrend and drag the stock down to ₹74 and ₹65 levels. In such a scenario, investors can exit the stock and stay on the sidelines.

Can you please give me the technical outlook for NCC?

JD Vengurlekar

NCC (₹70.5): In August 2013, the stock of NCC found base at around ₹11 and bottomed out. Since then, it has been on a long-term uptrend.

However, the stock encountered resistance at ₹118 in April and started to decline. Important support in the band between ₹55 and ₹58 cushioned the stock’s decline in September 2015 and February 2016.

But, on the upside, the key resistance at ₹82 is limiting the stock’s rally. After hitting this resistance in late April, the stock has been on a short-term downtrend. While trending down, it has breached its 50 and 200-day moving averages recently.

The stock now tests a support at ₹70. An emphatic fall below this level can pull it down to ₹60 and then to ₹55. Further decline below ₹55 will mitigate the uptrend and drag the stock down to ₹50 and then to ₹40 in the medium to long term.

Conversely, a strong rally above ₹82 will reinforce the bullish momentum and take the stock northwards to ₹90 and ₹100 levels in the medium term. Next resistances are at ₹110 and ₹118.

I have bought IL&FS Transportation Networks shares at an average price of ₹121 per share. What is the long-term prospect for the stock?

Subir

IL&FS Transportation Networks (₹69.5): The stock is in a downtrend across the short, medium and long term. In August 2015, it witnessed a steep nose-dive, breaking a key long-term support at ₹100. This psychological support subsequently turned into a crucial resistance and limited the stock’s upside thereafter.

Nevertheless, the stock found support at around ₹65 in February 2016 and has been on a sideways movement in the range between ₹65 and ₹80.

The indicators in the weekly chart are displaying positive divergence, implying that a trend reversal is on the cards. You can wait and consider averaging on a strong rally above the immediate resistance level at ₹80 which will signal a trend reversal.

The stock can then trend up to ₹100. An emphatic breakthrough of ₹100 can pave way the way for an up-move to ₹120 and ₹135 level in the medium to long term.

To alter the intermediate-term downtrend, the stock needs to conclusively breach the significant long-term resistance at ₹165 to target ₹200. On the downside, a slump below the immediate key support level of ₹65 will strengthen the downtrend and take the stock to ₹60 or even to ₹50 in the medium term.

Send your queries to techtrail@thehindu.co.in

Follow us on Telegram, Facebook, Twitter, Instagram, YouTube and Linkedin. You can also download our Android App or IOS App.

Published on June 05, 2016
This article is closed for comments.
Please Email the Editor