Technical Analysis

Keep away from Lupin

Yoganand D | Updated on March 09, 2018 Published on September 25, 2016





The stock can extend its downtrend and test support at ₹1,400 in the coming weeks

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

I would like to invest in Lupin and SRF. Please suggest suitable levels to buy over a six-month horizon.


Lupin (₹1488.7): The stock of Lupin has been on an intermediate-term downtrend since it encountered a key resistance at ₹2,100 in October 2015. Medium as well as short-term trends are down for the stock. It trades well below its 50 as well as 200-day moving averages.

Moreover, the daily relative strength index has entered the bearish zone from the neutral region and the weekly RSI is on the brink of entering the bearish zone, showing signs of weakness.

Other indicators such as price rate of change and moving average convergence divergence feature in the negative territory backing the stock’s downtrend. Short-term outlook is bearish.

The stock can extend its downtrend and test support at ₹1,400 in the coming weeks. An emphatic downward breakthrough of ₹1,400 can pull the stock down to ₹1,300 and ₹1,100 in the medium term.

Therefore, refrain from buying the stock at the current or near ₹1,400 levels. Investors can wait and consider buying below ₹1,300 with a long-term stop-loss at ₹1,100.

Strong rally beyond the immediate resistance at ₹1,600 can take the stock higher to ₹1,700 in the medium term.

To alter the intermediate-term downtrend, the stock needs to decisively move above the key resistance level of ₹1,850. Next targets are ₹1,970 and ₹2,100 levels.

SRF (₹1,789): On Friday, the stock of SRF skyrocketed 10 per cent, conclusively breaking through the immediate resistance at ₹1,700 and registered a new high at ₹1,803.

Though the stock appears to have resumed its medium as well as long-term uptrend, the indicators in the weekly chart show signs of weakness. Investors who are sitting on profits in this stock can consider taking partial profits off the table.

Immediate resistances the stock can encounter are ₹1,800 and ₹1,900 levels.

Slump below the ₹1,700 can drag the stock below ₹1,600 and ₹1,500 levels. Traders can consider buying at around ₹1,500 with a stop-loss at ₹1,400.

What is your advice on Coffee Day Enterprises bought at the time of IPO?

Taduri Rao

Coffee Day Enterprises (₹228.8): In early November 2015, the stock of Coffee Day Enterprises hit the market (at an issue price of ₹328) and has been trending down since then. It recorded a 52-week high at ₹318 in November 2015 and has been forming lower peaks and troughs. Medium and short-term trends are down.

You can consider holding the stock with a stop-loss at ₹217. An upward reversal from the immediate support at ₹225 or the next one at ₹220 can take the stock higher to ₹255 and then to ₹270 in the medium term.

But a decisive fall below ₹220 can strengthen the downtrend and pull the stock down to ₹200. Significant resistances above ₹270 are at ₹285 and ₹300.

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Published on September 25, 2016
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