Here are answers to readers’ queries on the performance of their stock holdings.
What is the view on the stock of Nestle, if I am prepared to wait for one to two years? Can it be bought at dips?
Sudhin Bathija
Nestle India (₹5,963.9): The stock of Nestle India continues to be in an uptrend over the long as well as intermediate-term.
However, after recording an all-time high at ₹7,499 in March 2015, the stock changed direction, triggered by negative divergence. Since then, it has been on a medium-term downtrend. However, the presence of a key long-term base in the band between ₹5,700 and ₹5,900 provided support in June and again in September this year.
The stock has failed to extend its up move and is once again testing this support band.
A strong breach of this support will reinforce the medium-term downtrend and drag the stock down to ₹4,900 and ₹5,000 — the next significant long-term base zone.
Such a fall will also mar the stock's intermediate-term uptrend.
Therefore, you can wait and consider accumulating the stock at lower levels. Further declines below ₹4,900 will the pave way for a downtrend to ₹4,350 and ₹4,500.
The long-term uptrend will stay in place as long as the stock trades above the ₹4,350 and ₹4,500 support band.
Investors with a long-term horizon can hold the stock with a stop-loss at ₹4,350 levels.
An upward resumption can take the stock higher to ₹6,500 and then to ₹7,000 in the long run.
I bought Opto circuits shares for ₹44. Kindly let me know the short and long-term aspects of the share.
Arun A, Dhawan N
Opto Circuits India (₹12.9): The stock of Opto Circuits is in a downtrend across all time frames — long, medium and short.
After trading above the key long-term support level of ₹19 from October 2014, the stock fell emphatically in August 2015 and continues to decline.
It recorded a multi-year low at ₹11 in early November and trades around this level with a high level of volatility.
Moreover, there are no signs of trend reversal or bullish momentum to take cues.
Therefore, desist buying the stock at this juncture. Wait for a strong rally above the long-term resistance level of ₹19. This can be a cue to buy (average) the stock.
Such a rally can take the stock higher to ₹23 and then to ₹26 in the medium to long-term. Immediate resistances are at ₹14 and ₹16.
A slump blow ₹11 will drag the stock down to below ₹10 or even lower.
I am holding shares of Vedanta bought at ₹114. Please discuss the medium to long-term trend.
Raajesh Reddy
Vedanta (₹91.8): The stock is in a downtrend across all time frames.
Nevertheless, after registering a multi-year low at ₹76.7 in late August, the stock started moving sideways.
It continues to do so in a wide range between ₹80 and ₹110.
You can consider averaging the stock at the lower boundary with a stop-loss at ₹75.
A strong breakthrough of the upper boundary at ₹110 will pave way for an up move to ₹130 and then to ₹170 in the medium to long-term.
Having said that, a strong fall below the immediate support level of ₹80 will strengthen the downtrend and drag the stock down to ₹60 level or even to ₹50 in the medium term. In such a scenario, exit the stock.
Send your queries to techtrail@thehindu.co.in
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