Technical Analysis

Prism Cement in a medium-term downtrend

Yoganand D | Updated on March 25, 2018

A strong downward breakthrough can pull the stock down to ₹90 and ₹80

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

What is the outlook for Prism Cement and BHEL for the next two to three years?

Sarvesh Goel

Prism Cement (₹108.45):

 

 

 

The stock of Prism Cement changed direction after encountering a key resistance at around ₹150 in mid-January this year. Since then, the stock has been in a medium-term downtrend. Short-term trend is also down for the stock.

While trending down, the stock decisively breached key support at ₹120 by declining 6.4 per cent last week. The stock trades well below its 50 and 200-day moving averages. The indicators and oscillators in the daily chart feature in the bearish zone, whereas the weekly indicators are likely to enter the negative territory.

However, the stock has a significant long-term support at ₹100, which could be tested in the near term. A strong downward breakthrough can pull the stock down to ₹90 and ₹80 in the short to medium-term.

That said, a plunge below ₹80 will alter the long-term uptrend and drag the index down to ₹70 and ₹60 in the long run. Investors with a long-term perspective can exit the stock in that scenario and re-enter at lower levels.

An emphatic rally above ₹125 is needed to alter the short-term downtrend. To change the medium-term downtrend, the stock has to conclusively break above ₹140. Such a breakthrough can push the stock northwards to ₹150 and ₹160 levels. Further rally beyond these barriers will take the stock to a new high. Investors with a long-term perspective can stay invested with a stop-loss at ₹78.

BHEL (₹81.3)

 

 

 

The stock of Bharat Heavy Electricals Limited (BHEL) is in a downtrend across all time-frames. Last week, it fell 5.7 per cent, breaching a key medium-term support level at₹85. The stock can continue to trend down and test supports at ₹76, ₹70 and ₹65 in the short to medium term. A decisive plunge below ₹60 will drag the stock to multi-year lows. Investors with a long-term perspective can stay invested with a fixed stop-loss at ₹70. On the other hand, to alter the short-term downtrend, the stock needs to rally beyond ₹100 initially. In that case, an up-move to ₹120 is possible.

An upward breach of ₹120 will alter the medium-term downtrend and push the stock northwards to ₹140 and then to ₹165. Investors with a medium-term perspective can consider buying on a rally above ₹120 levels with a fixed stop-loss.

Send your queries to techtrail@thehindu.co.in

Published on March 25, 2018

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