Your Stock Portfolio. Not a rich harvest for Kaveri Seeds

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

I have shares of Kaveri Seeds bought at ₹660 and Kitex at ₹700 respectively. Should I average or book loss?

K. Ravichandran

Kaveri Seeds (₹399.8): The stock of Kaveri Seeds has been in a sideways consolidation phase in a wide range between ₹300 and ₹450 since November 2015. In June 2016 and again in October, the stock failed to breakthrough the key resistance in the band between ₹450 and ₹460, which has become a significant level to watch now.

Last week, the stock fell 7.5 per cent after testing the key resistance band. It appears to have reversed down, triggered by negative divergence. However, the stock currently tests a key support at ₹400. Its 200-day moving average is also poised at this level. A plunge below this level can strengthen the bearish momentum and pull the stock down to ₹350 and then to ₹325 in the medium term. You can consider averaging the stock with a stop-loss at ₹290.

There is a possibility for an upward reversal from ₹300 from where the stock bounced back in January 2016. Significant supports below ₹300 are placed at ₹270 and ₹230.

On the upside, the stock needs to decisively break through the upper boundary at ₹450. In such a scenario, the stock can trend northwards to ₹500 and then to ₹550 levels in the medium term. To alter the intermediate-term downtrend, the stock needs to emphatically rally beyond ₹700 levels. Subsequent targets are ₹760 and ₹800 levels.

Kitex Garments (₹422.6): Since encountering a key resistance around ₹1,050 in July 2015, the stock of Kitex Garments has been on a long-term downtrend.

The corrective up-move that commenced from the February 2016 low of ₹340 failed to move beyond the key resistance zone between ₹530 and ₹540 in early July.

Encountering the same resistance last week, the stock tumbled 17 per cent. It is currently testing a support at ₹410.

A downward breakthrough of this support is possible at this juncture. Then, the stock can extend its downtrend to the ₹340-₹350 support band. Only an upward reversal from this support will be a cue for averaging the stock with a stop-loss at ₹325. However it is better to exit the stock in rallies and desist taking fresh positions as the stock’s primary trend is down and there are no signs of reversal. Strong break-out of ₹540 will be the initial sign of trend reversal.

Then, the stock can trend upwards to ₹580 levels. To alter the long-term downtrend, it needs to conclusively break the key resistance at ₹700.

Key resistances before that level are placed at ₹600 and ₹660. Tumble below ₹340 will bring back fresh selling pressure and the stock can decline to ₹300 or even to ₹250 levels in the long term.

Can I accumulate the stock of Lloyd Electric at this level.

E.Murali

Lloyd Electric & Engineering (₹298.2) : The long and medium-term trends are up for the stock.

However, the stock began to decline after hitting a barrier at around ₹330 in late October 2016. Last week, it plunged almost 7 per cent. Short-term trend is down and can extend in the near future.

The stock can test support at ₹275, ₹260 and ₹250 in the near term. You can consider accumulating the stock.

As long as it trades above the key support at ₹250, its medium-term trend will remain up.

But a slump below ₹250 will alter the medium-term uptrend and pull the stock down to ₹230 and ₹210 levels.

Resumption of the uptrend can take the stock higher to ₹310 and ₹330 levels once again.

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