Your Stock Portfolio. REC in a downtrend

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

I am a long-term investor in REC. What are the prospects for the stock?

Harish

Rural Electrification Corporation (₹160.6): The stock of Rural Electrification Corporation (REC) has been in an intermediate-term downtrend since recording an all-time high of ₹223 in early May this year. However, the stock found support in the band between ₹150 and ₹155 in late August and started the move sideways in the ₹150-180 range since then. Over the last two weeks, the stock has been declining and is in a near-term downtrend. It now tests the lower boundary of the sideways range with negative bias. The stock hovers well below its 50 and 200-day moving averages. The key support at ₹150 is also a long-term trend-deciding level. A conclusive fall below the level will be a threat to the long-term uptrend that has been in place since taking support at around ₹76 in early 2016.

Strong fall below ₹150 can pull the stock down to ₹140 and ₹120 in the short- to medium-term horizon. Further declines below ₹120 can pull the stock down to ₹100 and ₹90 levels in the long term. Investors with a long-term perspective should be on alert if the stock falls decisively below ₹120 levels. On the other hand, if the stock rebounds from the key immediate support level, an up-move the resistance levels of ₹170 and ₹180 levels is possible in the medium term. An emphatic break above the vital resistance at ₹180 is needed to bring back bullish momentum and take the stock northwards to ₹200. Next key resistances are placed at ₹210 and ₹223.

I have shares of Syndicate Bank bought at an average price of ₹86. Should I accumulate or book loss.

Murugesan M

Syndicate Bank (₹89.7): The stock of Syndicate Bank has been in a medium-term uptrend after taking support from the significant long-term base in the band between ₹60 and ₹62 in late September this year.

In late October, the stock conclusively breached a key medium-term resistance as well as 200-day moving average by strong gains.

However, it met with a key resistance at ₹90 in early November and started to test it. You can consider averaging the stock in corrective declines with a stop-loss at ₹72. Investors with a long-term perspective can also consider buying the stock in dips with a stop-loss at ₹72. Conclusive breakthrough of ₹90 can push the stock higher to ₹100 initially.

Further above ₹100 can take the stock northwards to ₹108 and ₹118 in the medium to long term. Short-term is up for the stock. Immediate supports are placed at ₹84 and ₹78.

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