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

I have shares of Kaveri Seed Company Ltd (KSCL) at ₹800 per share. What is the long and medium-term outlook? Also, suggest your views on JK Tyre purchased at ₹107.

Sai Naveen

Kaveri Seed Company (₹348.8): Following a strong fall below the key support level of ₹700 in August, the stock altered its intermediate-term uptrend and continued to decline.

Since encountering a key long-term resistance in the band between ₹1,020 and ₹1,060 in April 2015, the stock has been on a downtrend. Medium-term trend has been down from the October peak of ₹543.

The price action from last August is forming a falling wedge pattern, a bullish reversal pattern in this scenario. The stock found support at ₹300 in December and began to move sideways. Again, it took support from ₹300 in mid-January and bounced up.

Moreover, the stock has a significant long-term support in the range between ₹280 and ₹300 which gives some comfort to investors with a long-term perspective. You can make use of declines to accumulate the stock with a stop-loss at ₹270.

An emphatic break-out of the immediate resistance at ₹400 will result in a pattern break-through and the stock can move upwards to ₹460 and then to ₹500 in the medium term.

Subsequent resistances for the stock are placed at ₹540 and ₹600. To change the intermediate-term downtrend, the stock needs to breach the crucial resistance at ₹700.

Eventual targets for the stock will be ₹760 and ₹800. On the other hand, a strong fall below the support band between ₹280 and ₹300 will strengthen the downtrend and drag the stock down to ₹250 or ₹230 in the long run.

JK Tyre & Industries (₹87.7): Ever since recording an all-time high of ₹162.9 in December 2014, the stock has been on an intermediate-term downtrend. After encountering a key resistance at ₹118, the stock of JK Tyre reversed direction in early January 2016. It fell sharply in mid-January, conclusively breaching its moving average compression (21, 50 and 200-day moving average) at around ₹105.

However, the stock can find support at a key base level at ₹80 from which it had bounced back last June. So, investors with a long-term view should watch for a reversal at ₹80 and consider holding the stock with a stop-loss at ₹76.

But a decisive downward breakthrough of ₹80 will strengthen the downtrend and drag it down to ₹65 or even to ₹52 in the long term. In that case, exit and re-enter at lower levels. Immediate resistances are at ₹100 and ₹120. Only a strong rally above ₹120 will change the downtrend and take the stock upwards to ₹130 and ₹145 levels.

I purchased Avanti Feeds at ₹2,800. What is the technical outlook for the stock?

S Jayaraman

Avanti Feeds (₹413.8): The stock of Avanti Feeds had a stock-split from the face value of ₹10 to ₹2 in November 2015. So, your break-even price is ₹560. After a medium-term downtrend from the the October peak of ₹690 (split adjusted), the stock found support at around ₹350 in this January. Last week, the stock gained 5 per cent decisively breaching its 21-day moving average and the downtrend line.

This is an initial sign of reversal, but to reinforce further bullish momentum, the stock has to break through the key resistance at ₹450. Thus, it can rally to the medium-term resistance level of ₹500. Targets above ₹500 are at ₹560 and ₹600.

Conversely, conclusive decline below the immediate support at ₹350 will bring back selling pressure and drag the stock down to ₹300 in the medium term.

Send your queries to techtrail@thehindu.co.in

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