Technical Analysis

Shriram Transport Finance on a downtrend

Yoganand D | Updated on January 13, 2018 Published on March 05, 2017



The stock needs to break the resistance of ₹1,050 to take it higher to ₹1,150 levels

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

I have shares of Shriram Transport Finance Company as a long term investment. I would like to know the potential of this stock. Please give your suggestion.

R T Rajasekaran

Shriram Transport Finance Company (₹920): The stock of Shriram Transport Finance is in a long-term uptrend. However, in July and August 2016, the stock encountered a key long-term resistance in the ₹1,270-1,300 range. The stock subsequently failed to continue its uptrend and changed direction, triggered by negative divergence in the weekly indicators. Since then, the stock has been on an intermediate-term downtrend. Nevertheless, it found support at its long-term base in the ₹750-780 band in late December 2016 and witnessed a corrective up move till ₹995 levels. The stock faces difficulty in surpassing the key resistance level of ₹1,000. Strong rally beyond this level can strengthen the corrective uptrend.

However, the stock needs to emphatically break above the significant resistance level of ₹1,050 to alter the intermediate-term downtrend and take it higher to ₹1,120 and then to ₹1,150 levels in the medium term. Further rally beyond ₹1,150 can push the stock higher to ₹1,200 and ₹1,300 levels in the long run.

The stock tests an immediate support at ₹890 levels. A slump below this base could pull it down to ₹850 or even ₹800 levels in the medium term. Having said that, the significant long-term support in the ₹750 and ₹780 band could hold the stock. Investors with a long-term perspective can hold the stock with a stop-loss at ₹750.

I have shares of Majesco at ₹508 and Arman Financial Services at ₹260. What are the medium to long-term target for these shares? Should I add, hold or sell?

Nagananthini Kannan

Majesco (₹376.5): Since registering a new high at ₹789 in January 2016, the stock has been on a long-term downtrend. While trending down, it decisively breached its key support at ₹450 last October and continued its downtrend.

However, after recording a 52-week low of ₹331, the stock found support and reversed direction in mid-February this year. The stock is in a near-term uptrend.

Last week, it jumped 8.4 per cent with good volume and tests a resistance at ₹390. You could average the stock in declines with a long-term stop-loss at ₹320. Key immediate resistance are at ₹390 and ₹410 levels.

An emphatic rally above ₹410 will strengthen the uptrend and take the stock higher to ₹430 and ₹450 levels in the medium term. Subsequent resistance are placed at ₹482 and 500.

The stock needs to conclusively break above the vital trend deciding level of ₹560 to alter the long-term downtrend and take it northwards to ₹600 and ₹620 levels. Immediate supports are placed at ₹350 and ₹330 levels.

Arman Financial Services (₹223.2): Long-term trend is up for the stock. After a corrective decline in November, the stock found support at ₹175.

This base level provided support in December as well as in January. Thereafter, the stock resumed its uptrend and encountered a key resistance at ₹240. Strong rally beyond this level can take the stock higher to ₹270 and ₹290 levels.

Next resistance is at ₹325. Immediate supports are at around ₹210 and ₹200.

A plunge below ₹200 will mar the stock’s near-term uptrend and pull it down to ₹175 levels. But a downward break-out of ₹175 levels can bring back selling pressure and drag the stock down to ₹150 and ₹130 levels in the medium term.

Investors with a long-term view can hold the stock with a stop-loss at ₹140.

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Published on March 05, 2017
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