Technical Analysis

Reliance Capital on revival mode

Yoganand D | Updated on January 17, 2018 Published on July 24, 2016

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Rally beyond ₹525 can strengthen the uptrend and take the stock higher to ₹600



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

I had purchased shares of Reliance Capital at ₹565 and Sintex at ₹115. What are the for these stocks?

Rajeev

Reliance Capital (₹408.1): The significant long-term support at around ₹300 provided base for the stock of Reliance Capital in August 2015 and again in February 2016.

The stock has been on a medium-term uptrend since February this year.

But it encountered a key resistance at ₹420 in late May and started to move sideways in the band between ₹375 and ₹420 with a positive bias. An emphatic breakthrough of the key resistance at ₹420 can take the stock higher to ₹470 in the medium term. You can consider averaging the stock on dips with a stop-loss at ₹340. Strong break-out of the long-term resistance at ₹470 will alter the stock's intermediate-term downtrend that has been in place since June 2014 peak at ₹688.

Next key resistances beyond ₹470 are at ₹500 and ₹525. Further rally beyond these resistances can strengthen the uptrend and take the stock higher to ₹550 and ₹600 in the long term.

But a decisive fall below the immediate support at ₹375 can weaken the stock and drag it down to ₹350. Vital support at ₹360 can cushion the stock. But a strong plunge below ₹350 will reinforce the downtrend and drag the stock down to the long-term base level of ₹300.

Sintex Industries (₹80): Following a sharp nose-dive in mid-January 2016, the stock of Sintex Industries found support at ₹65 in February. Subsequently, the stock started to trend up.

But a key resistance at ₹85 has been capping the stock’s uptrend from April. Since then, the stock has been on a short-term sideways consolidation phase in the band between ₹72 and ₹85. A conclusive upward breakthrough of this sideways range can take the stock higher to ₹95 and ₹100 levels.

Nevertheless, an important resistance and trend-deciding point is pegged at ₹105.

A decisive move beyond this level will alter the intermediate-term downtrend that has been in place from the March 2015 peak of ₹136. Next targets are ₹115, ₹125 and ₹135.

You can wait and consider averaging on a conclusive break above ₹85 with a stop-loss at ₹70. On the downside, plunge below the lower boundary at ₹72 will strengthen the intermediate-term downtrend and pull the stock down to ₹65 once again. Significant supports below ₹65 are placed at ₹60 and ₹52.

I bought shares of Talwalkars at ₹265. Kindly indicate the supports and resistances.

TVS Prakash Rao

Talwalkars Better Value Fitness (₹227.5): After a strong rally in 2014 and early 2015, the stock of Talwalkars Better Value Fitness recorded an all-time high at ₹409.8 in March 2015.

The stock then changed its direction, triggered by negative divergence and began to decline. Since then, it has been on an intermediate-term downtrend.

The stock needs to decisively break though the key resistance at ₹300 to alter the downtrend. Such a break can take the stock upwards to ₹325 and ₹360 levels before scaling back to ₹400 levels. In late March, the stock found support at ₹182 and began to move upwards. Key resistance in the band between ₹250 and ₹260 is limiting the stock from further rally.

Strong breach of this barrier will pave way for an up-move to ₹270 and ₹300 levels in the medium term.

Conversely, failure to move past ₹250 can pull the stock down to ₹210 and then to ₹182 in the medium term.

Further decline below 182 will strengthen the downtrend and drag the stock down to ₹165 and then to ₹145 levels in the long term.

Send your queries to techtrail@thehindu.co.in

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Published on July 24, 2016
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