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Here are answers to readers’ queries on the performance of their stock holdings.
I bought shares of Petronet LNG at ₹255 and Indo Count Industries (ICIL) at ₹922. What are the prospects in the near future as well as in the long term.
Manoj
Petronet LNG (₹241.8): The stock of Petronet LNG encountered a key resistance at ₹266 on February 8 and started to decline. Last week, it tumbled 8 per cent forming a bearish engulfing candlestick pattern in the weekly chart.
Since late December 2015, the stock has been in a sideways consolidation phase in the band between ₹240 and ₹266. This sideways movement has resulted in the formation of a double top pattern, a bearish reversal pattern with neckline at ₹240. The stock is now testing this neckline with negative bias.
An emphatic downward break of the chart pattern will strengthen the downtrend. In this case, the intermediate-term uptrend that has been from the August low of 2015 will be under threat.
Downside price target of the pattern is ₹215. Further decline below ₹215 can drag the stock down to ₹200 or even to ₹185 in the medium term.
As the stock is trending downwards and there is risk of it declining further, you can consider exiting it at the current level and re-entering at lower levels. The long-term trend has been up for the stock from its January 2014 low of ₹102.
This uptrend will remain in place as long as the stock trades above the key trend-deciding level of ₹185. Investors with a long-term perspective can wait for a decline and buy the stock with a stop-loss at ₹180. Key resistances above ₹252 are at ₹265 and ₹272.
Indo Count Industries (₹960.3): The long-term uptrend for the stock of Indo Count Industries came to a halt last Monday, after registering an all-time high at ₹1,248.
Triggered by negative divergence in the indicators in the weekly and monthly charts, the stock changed direction. Encountering resistance at ₹1,225, the stock nosedived 20 per cent last week. It has formed a bearish engulfing candlestick pattern which signals downward reversal. Further, the stock conclusively breached its immediate support at ₹1,000 on Friday. The indicators and oscillators in the daily chart have started to enter the bearish zone.
The weekly indicators have turned downwards, which signify downward pressure. Therefore, consider taking profit at this juncture and exiting the stock. A strong fall below the next support level of ₹820 will strengthen the downtrend and drag the stock down to ₹700 or even ₹600 in the long run. Resistances above ₹1,000 are at ₹1,100 and ₹1,200.
Send your queries to techtrail@thehindu.co.in
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