Technical Analysis

Mphasis on an uptrend

Yoganand D | Updated on January 20, 2018 Published on June 26, 2016

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A breakthrough of the resistance at ₹560 can take the stock up to ₹650 in the long term



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

What are the long-term prospects of Mphasis purchased at ₹502?

Yogesh Kumar

Mphasis (₹549.5): Since finding support at around ₹300 in late 2011, the stock has been trending upwards. However, key resistance at around ₹500 limited the stock’s rally in May 2013 and November 2015.

Strong up-move in late May this year emphatically breached this resistance level, which is a positive sign from a long-term perspective.

Investors with a long-term view can make use of declines to buy the stock, while maintaining a stop-loss at ₹475.

A decisive breakthrough of the immediate resistance at ₹560 can strengthen the medium as well as short-term uptrend and take the stock up to ₹600 and ₹650 in the medium to long-term. Conclusive fall below the immediate supports at ₹520 and ₹500 will mar the short-term uptrend and drag the stock down to ₹475 or even ₹450 levels. Significant supports below ₹450 are at ₹430 and ₹400.

I bought Essdee Aluminium shares at ₹103. What are your views on it from a two to three-year perspective?

Mahipal M

Ess Dee Aluminium (₹68.1): The Stock of Ess Dee Aluminium is in a downtrend across all time frames — short, medium and long term. In late March 2016, the stock emphatically breached a long-term support at ₹125 and continued to decline.

However, the stock appears to have found support at around ₹68 in early June and tests it. On Friday, the stock registered a new low at ₹62 and bounced up. The indicators and oscillators in the weekly chart are displaying positive divergence, implying that a trend reversal is on the cards. You can consider averaging the stock with a stop-loss at ₹60.

Strong rally beyond the immediate resistance at ₹90 can take the stock higher to ₹105 and ₹125 in the medium term. But desist taking fresh positions on a conclusive fall below the current support at around ₹68.

Such a fall can drag the stock down to ₹60 and then to ₹50 in the medium term. Strong long-term resistances above ₹125 are pegged at ₹150 and ₹180.

What would be the right price to enter the Emco stock to derive long-term price advantage?

Desai

Emco (₹25.1): The long-term trend is down for the stock of Emco. But the medium-term trend has been sideways consolidation in the band between ₹23 and ₹28 since February 2016. An emphatic breakthrough of ₹28 can take the stock higher to ₹31 and ₹35 in the medium term. But a decisive fall below the support at ₹23 can drag the stock down to ₹20 and ₹17 in the coming weeks.

You can consider accumulating at the support levels with a stop-loss at ₹19. An emphatic break out of the long-term resistance level of ₹35 is needed to strengthen the bullish momentum and take the stock higher to ₹40 and then to ₹50 in the long run.

I have shares of Everst Kanto ₹33 and Lanco Infratech at ₹38. Should I sell or average it at lower levels?

Ganesh M S

Everest Kanto Cylinder (₹14.7): The stock has been on a sideways consolidation phase in the wide band between ₹7 and ₹24 since mid-2013. Currently, it tests a key support at around ₹14.

Consider averaging on an upward reversal from this support with a stop-loss at ₹13. Strong rally beyond ₹18 can take the stock higher to ₹21 and ₹24 levels. However, a decisive fall below ₹14 can drag the stock down to ₹11.5 and then to ₹7 once again.

A conclusive breakthrough of the long-term resistance at ₹24 will pave way for an up-move to ₹30 and then to ₹35 in the long run. There are no signs of revival in the stock of Lanco Infratech (₹4.5). Consider exiting it.

Send your queries to techtrail@thehindu.co.in

Published on June 26, 2016
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