Technical Analysis

Jubilant Life Sciences poised at long-term base

Yoganand D | Updated on August 18, 2019 Published on August 18, 2019

A break above ₹500 will alter the short-term downtrend and take the stock up to ₹600

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

I bought shares of Jubilant Life Sciences and HSIL at ₹658 and ₹378, respectively. Should I average my cost by buying at the current prices. What are the long-term prospects for these stocks?

Rajeev Kumar

Jubilant Life Sciences (₹447.2): The stock of Jubilant Life Sciences has been in a medium-term downtrend since encountering a key resistance at around ₹900 this March.

It breached a key support at ₹625 in May and witnessed a sharp fall, resuming the intermediate-term downtrend that has been in place since registering a new high at ₹1,039 in February 2018.

Short-term trend is also down. But the stock appears to have found support at the long-term base in the band between ₹410 and ₹425 recently.

The stock is currently poised above this long-term support band.

The weekly relative strength index and the price rate of change indicators display positive divergence, which implies trend reversal on the cards.

With the stock hovering at a key long-term support and the indicators projecting a trend reversal, a short-term rally is possible in the stock now.

You can consider averaging the stock with a stop-loss at ₹410.

A strong break above the immediate resistance level of ₹500 will alter the short-term downtrend and take the stock up to ₹550 and ₹600 levels in the medium term.

The significant long-term resistance is in the ₹625-650 band.

An emphatic break above this barrier will alter the medium-term downtrend and take the stock up to ₹700.

Subsequent vital resistance is at ₹750 and ₹800. Inability to move beyond ₹650 will be cue for booking partial profits.

On the downside, a decisive tumble below ₹410 will reinforce the downtrend and drag the stock to ₹380 and ₹350 levels.

A further fall below ₹350 will pull it down to ₹300.

In such a scenario, avoid taking fresh positions and average at lower levels.

HSIL (₹234.5): The stock of HSIL gained 4 per cent on Friday and managed to close above the 21-day moving average.

Although the stock is in a downtrend across all-time frames, there are signs of short-term trend reversal.

The daily relative strength index shows positive divergence and has entered the neutral region from the bearish zone.

 

 

Key support provides base at ₹210. Nevertheless, the stock faces a crucial resistance at ₹250.

A conclusive break above this level will take the stock up to ₹270 and ₹300. Consider averaging in declines with a stop-loss at ₹190 and book partial profits at ₹300.

An emphatic break above the long-term barrier at ₹300 is needed to alter the medium-term downtrend and take the stock up to ₹325 and ₹350 levels.

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Published on August 18, 2019
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