Technical Analysis

Outlook is turning positive for Lupin

Yoganand D | Updated on January 17, 2018 Published on July 10, 2016

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Price action since mid-March indicates a bullish reversal pattern for Lupin



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

I hold Lupin bought at ₹1,770. Should I average at current levels?

RC Bhatia

Lupin (₹1,637.3): The stock of Lupin encountered a key resistance at around ₹2,100 in April 2015 and again in October. Subsequently, it started to decline and has been on an intermediate-term downtrend since last October. Significant support at ₹1,400 arrested the stock's decline in March 2016 and early June.

Over the last one month, the stock has been trending up and has been on a short-term uptrend. The price action since mid-March has led to the formation of a double bottom pattern, which is a bullish reversal pattern typically found at the end of a downtrend.

Last week, the stock surged 5.7 per cent and is now testing the pattern neckline at ₹1,700 with a positive bias.

The 200-day moving average at ₹1,717 is also a key barrier. An emphatic breakout of the resistance band between ₹1,700 and ₹1,717 will strengthen the long-term uptrend.

The stock can then trend northwards to ₹1,850 initially and subsequently to ₹2,000 in the medium to long-term. Further rally beyond ₹2,000 can encounter resistance at ₹2,100.

You can consider averaging the stock in corrective declines with a stop-loss at ₹1,370. Investors with a long-term perspective can consider buying the stock with the same stop-loss. Immediate supports are placed at ₹1,500 and ₹1,400. Next support below ₹1,400 is pegged at ₹1,300.

What is the long-term view on Superhouse?

Anil Dixit

Superhouse (₹159.1): The long-term trend is up for the stock of Superhouse. However, it registered a new high at ₹295.9 in early October 2014 and changed direction. Since then, it has been on an intermediate-term downtrend, forming lower peaks and troughs.

After retracing 61.8 per cent fibonacci retracement level of the prior uptrend, the stock found support in the band between ₹125 and ₹130 in February this year. Thereafter, it started to move sideways in a broad range between ₹130 and ₹170.

A conclusive breakthrough of the upper boundary at ₹170 will strengthen the uptrend and take the stock higher to ₹200 in the medium term. Subsequent rally beyond ₹200 can take the stock higher to ₹225 and ₹260 in the long run.

Conversely, an emphatic tumble below the key support band between ₹125 and ₹130 will mitigate the uptrend and drag the stock down to ₹110 and ₹90 levels in the medium term.

Immediate supports are placed at ₹150 and ₹140 levels. Investors with a long-term view can hold the stock with a stop-loss placed at ₹125.

I have shares of Zen Technologies bought at ₹92. What are the prospects for it?

Varun

Zen Technologies (₹83.2): In early January 2016, the stock recorded a new high at ₹134.9, which is also the 52-week high. Since then, the stock has been on a medium-term downtrend. But it found support in the range between ₹60 and ₹65 during late February and early June and began to trend up. The stock is facing difficulty in surpassing the key resistance at ₹90 which also coincides with 38.2 per cent fibonacci retracement level of the previous downmove. Strong break-out of this resistance level can strengthen the uptrend and take the stock higher to ₹105. To alter the medium-term downtrend, the stock needs to breach ₹105. Next targets are ₹120 and ₹135. On the other hand, immediate supports at ₹70 and ₹60 can cushion the stock's decline.

Nevertheless, a decisive fall below ₹60 will strengthen the medium-term downtrend and drag the stock down to ₹50 or even to ₹40 levels. Hold the stock with a stop-loss at ₹60.

Send your queries to techtrail@thehindu.co.in

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Published on July 10, 2016
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