Your Stock Portfolio. Little credit to CARE

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

The share price of CARE is falling. Is it the right time to buy? Please let me know the technical outlook.

N Raman

Credit Analysis and Research (₹1114.2): Ever since recording an all-time high at ₹1,808 in early April 2015, the stock of Credit Analysis and Research (CARE) has been on an intermediate-term downtrend.

From that peak, the stock has plunged 38 per cent. The short-term trend is also down for the stock. Current downtrend of the stock has retraced 50 per cent fibonacci retracement level of its prior uptrend.

Moreover, the stock has a key support at ₹1,100 levels. Both the daily moving average convergence divergence and relative strength index are displaying positive divergence, implying that a trend reversal is on the cards. Hence, if the stock reverses higher from the current level it can test resistance at ₹1,200 and then at ₹1,300.

A strong rally above the second resistance can alter the short-term downtrend. However, to alter the intermediate-term downtrend, the stock needs to decisively breakthrough the key resistance level of ₹1,450.

The stock can then trend northwards to ₹1,550 or ₹1,600 levels in the medium term. Next key barriers are pegged at ₹1,680 and ₹1,800 levels. Therefore, investors with a long-term perspective can buy at current levels with a stop-loss at ₹1,070.

Additional purchases can be considered on a rally above ₹1,300. On other hand, a conclusive downward breakthrough of the support level of ₹1,100 can drag the stock down to ₹1,000. Subsequent long-tem support is in the ₹870-₹900 range.

Let me know the future prospect of Ashiana Housing.

Shri Ram Sikaria

Ashiana Housing (₹175): The stock’s strong rally came to an end after registering a life-time high at ₹327 in late February. Since then, the stock has been on an intermediate-term downtrend.

In August, the stock decisively breached a key support at ₹205 that strengthened its downtrend. Nevertheless, it found support at ₹155 in mid-September. Triggered by positive divergence in the daily relative strength index, the stock reversed direction.

Last week, the stock surged 5.8 per cent with good volumes. This rally can encounter resistances at ₹186 and ₹205 levels in the short term. Investors with a short-term horizon can hold the stock with a stop-loss at ₹145 and exit at ₹205 levels.

To alter the intermediate-term downtrend, the stock needs to move past ₹240 levels. Long-term targets are ₹270 and ₹310.

But a slump below ₹155 can strengthen the downtrend and pull the stock down to ₹130 and then to ₹110. Investors should thus exit and consider re-entering at lower levels with a stop-loss at ₹95.

I purchased shares of Praj Industries at ₹115 per share. Now, it trades below ₹90. What is the technical view?

P Agarwal

Praj Industries (₹84.6): After a medium-term uptrend in June and July, the stock encountered an important resistance at ₹115. Subsequent downward reversal from this resistance has failed to halt at the key support level of ₹90 in mid-August.

But the stock was able to find base at ₹75 recently and started to trend upwards. You can consider averaging the stock at current levels with a stop-loss at ₹75.

An emphatic breach of the immediate resistance at ₹90 can push the stock higher to ₹100 and then to ₹115 levels in the medium term. Investors with a medium-term view can consider taking partial profits off at this resistance level.

On the other hand, conclusive fall below ₹75 can strengthen the bearish momentum and pull the stock lower to ₹70. Next significant support is at ₹60.

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