Technical Analysis

Movers and Shakers: Stocks that will see action this week

BL Research Bureau |Akhil Nallamuthu | Updated on: Jun 18, 2022

Here is what the charts say about the shares of Muthoot Finance, PFC and Pidilite Industries

Muthoot Finance (₹999.8)

In a steady downtrend

The stock of Muthoot Finance has been on a decline since November last year when it faced a hurdle at ₹1,700. As it moved southward over the past couple of months, it invalidated the supports at ₹1,250 and ₹1,150 indicating that the bears have gained good traction. Currently trading at around ₹1,000, the stock is likely to see a corrective rally to ₹1,150. Thereafter, the downtrend can resumen resume the downtrend.

Given that the bears have a good grip, we expect the stock to initially decline to ₹915 and then to ₹775. Considering the above factors, traders can initiate fresh short positions at the current level of ₹1,000 and short more on a rally to ₹1,150. Place stop-loss at ₹1,250 initially, but revise it down to ₹1,020 when the stock slips below ₹915. Liquidate all the shorts when price touches ₹775.

PFC (₹98.9)

Closes below key support

Since mid-October last year, the stock of Power Finance Corporation (PFC) is on a decline. It had faced a strong barrier around ₹150. Since then, it has been forming lower lows and lower highs. As the downtrend extended, the stock breached the support of ₹105 last week, opening the door for further fall. Although ₹95 is a minor support, we forecast the price to decline to ₹82 and then to ₹76. Yet, the stock could retrace towards ₹105 before depreciating from here.

So, traders can initiate shorts now and on a rally to ₹105. Keep the stop-loss at ₹115. When the stock falls to ₹90, revise the stop-loss down to ₹105. When price touches ₹82, exit 75 per cent of the shorts and alter stop-loss to ₹90. Liquidate the remaining shorts at ₹76 as the stock could see a rally from here.

Pidilite Industries (₹1,999.45)

Confirms a head & shoulder

The stock of Pidilite Industries is on a descent since the beginning of this year after facing resistance at ₹2,750. In early-May, it broke below the support at ₹2,200. and with that, This confirms a head and shoulder pattern, indicating a bearish reversal. The pattern hints at a drop to ₹1,650. Hence, from the current level of ₹2,000, the price is expected to drop. The with first support is seen at ₹1,800.

Subsequently, there is another support at ₹1,675. But now, it could see a pullback to ₹2,200. Hence, traders can short at the current level of ₹2,000 and add shorts when price moves up to ₹2,200. Place initial stop-loss at ₹2,300. When price drops to ₹1,900 tighten stop-loss to ₹2,050. At ₹1,800 liquidate three-fourth of the total shorts and modify the stop-loss to ₹1,920 for the rest of the positions. Exit the remaining at ₹1,675.

Published on June 18, 2022
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