Technical Analysis

Kaveri Seed under selling pressure

Yoganand D | Updated on January 17, 2018 Published on August 07, 2016

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Strong fall below ₹370 can pull the stock down to ₹340 and then to ₹300



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

What are the prospects for Kaveri Seed Company? It has been falling from ₹450 steadily.

Viswanath

Kaveri Seed Company (₹376.4): The stock of Kaveri Seed Company has been on an intermediate-term downtrend since encountering a key long-term resistance in the band between ₹1,020 and ₹1,060 in April 2015. However, it found support at ₹300 in January and reversed direction.

In February, we had stated that the significant long-term support for the stock was in the ₹280-₹300 range; this may give some comfort to long-term investors. The stock was predicted to rise to ₹460 and then to ₹500 in the medium term.

In line with our expectation, the stock bounced back, but the up-move encountered key resistance at around ₹460 in June and resumed its downtrend. The stock has been on a short-term downtrend. Now, it tests a key support at ₹370. Strong fall below this base level can pull it down to ₹340 and then to ₹300 in the medium term.

Such a fall can attract fresh buying in the stock at around the long-term support level of ₹300. Investors with a long-term perspective can hold it with a stop-loss at ₹270.

An upward reversal from the long-term support band can take the stock higher to ₹460 and then to ₹500. Important resistances beyond ₹500 are placed at ₹540 and ₹600.

The stock needs to emphatically breach the key resistance at ₹700 to alter the intermediate-term downtrend. Conversely, a decisive fall below the long-term support band between ₹280 and ₹300 will reinforce the downtrend and drag it to the levels of ₹250 or ₹230.

I have bought shares of SAIL at ₹65. Should I hold or sell.

Vamsi Kamepalli

Steel Authority of India (₹48.1): After a sharp rally in May 2014, the stock of Steel Authority of India (SAIL) encountered resistance at ₹110 in June 2014. Since then, it has been trending down.

However, after recording a multi-year low at ₹33.5 in February 2016, the stock has been inching higher. But key resistance at ₹50 is restricting this uptrend.

Strong break-out of the immediate resistance at ₹50 can take the stock upwards to ₹56, ₹60 and ₹66 in the medium term. You can hold the stock and consider averaging it with a stop-loss at ₹40. Inability to move beyond the long-term resistance at ₹66 will be a cue for taking profits off the table.

An emphatic break through of the significant resistances at ₹66 and ₹75 will alter the downtrend and take the stock northwards to ₹90 and ₹100 in the long run. On the downside, key supports are at ₹42 and ₹38. Conclusive fall below these supports can pull the stock down to ₹35 and ₹33.

I bought Loyal Textile Mills shares at ₹850. What are your views on the stock?

Vijay Kasera

Loyal Textile Mills (₹632.4): After registering a new high at ₹870 in mid-May, the stock of Loyal Textile Mills changed direction and fell sharply. Nevertheless, it found support at ₹550 in late May.

Since then, the stock has been on a sideways movement in the band between ₹550 and ₹700. The stock is very volatile and trades with thin volume. It also sometimes moves from circuit to circuit.

This doesn’t provide proper opportunity to buy or sell the stock. Maintain a stop-loss at ₹550 and consider exiting the stock on rallies with a stop-loss maintained at ₹550. Conclusive move beyond ₹700 can push the stock higher to ₹800 and then to ₹870. On the other hand, slump below the lower boundary at ₹550 will strengthen the short-term downtrend and pull the stock down to ₹470 and ₹400.

Send your queries to techtrail@thehindu.co.in

Published on August 07, 2016
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