Technical Analysis

Sintex Industries breaches a key base

Yoganand D | Updated on January 24, 2018 Published on June 14, 2015





The stock fell 8.7 per cent the week before, breaking through the pattern neckline

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

Can you give the technical outlook on Sintex Industries and Jain Irrigation?

Prachiti W

Sintex Industries (₹97.5): Since bottoming out from the August 2013 low of ₹17, the stock has been trending upwards. The stock decisively breached a key long-term resistance level at ₹115 in early January 2015 and extended its rally.

Nevertheless, the next long-term resistance at around ₹135 halted the stock in March. It subsequently changed direction after hitting the resistance and has been on a medium-term downtrend since March.

The price action since late January 2015 appears to be formation of a complex head and shoulders pattern with the neckline at ₹105.

Last week, the stock tumbled 8.7 per cent, breaking through the pattern neckline and strengthening the downtrend. Now, the stock pattern has a downward price target of ₹70; this could be reached in the medium-term horizon. Short-term trend is also down.

The stock has a key immediate support at ₹85 and a decisive fall can drag it lower to ₹70 level, which is a significant support level. Further fall below this level will mar the intermediate-term uptrend and drag the stock down to ₹60 and then to ₹50 in the ensuing months.

Therefore, investors with a long-term perspective should hold the stock with a stop-loss at ₹68. An upward reversal from the ₹70 or much higher at ₹85 levels can take the stock northwards initially to ₹105.

An emphatic rally beyond ₹105 can push the stock higher to ₹120 and ₹135 levels.

Jain Irrigation Systems (₹62.2): The stock’s rally encountered a significant resistance at around ₹130 in June and again in July 2014 and reversed direction. Since then the stock has been on an intermediate-term downtrend.

However, the presence of key long-term support in the band between ₹55 and ₹60 is providing base for the stock over the past one month.

Investors with a long-term perspective can hold the stock with a stop-loss at ₹55.

An upward reversal for the aforementioned support band can take the stock northwards to ₹75 in the short-term.

Only a decisive rally above the key zone of ₹95 and ₹100 will alter the intermediate-term downtrend and take the stock upwards to ₹130 once again.

But, failure to rally beyond ₹75 will keep the stock moving in a sideways consolidation phase in the broad range between ₹55 and ₹75.

Having said that, a strong plunge below the key support level of ₹ 55 will pull the stock down to ₹47 and then to ₹40 in the long term.

What are the prospects for Kalindee Rail purchased at ₹160?

KP Jayaram

Kalindee Rail Nirman Engineers (₹106.1): After a medium-term up move, the stock met with a significant long-term resistance at ₹165 in February 2015. This resistance capped the stock from rallying further that rally in the same month, and the stock started to decline.

It has been on a medium term downtrend since then. The short-term trend is also down. Moreover, the stock trades well below its 50- and 200-day moving averages.

After testing the key support at ₹110, the stock decisively breached this level by declining 5 per cent in the week ago.

Now, the stock’s downtrend can intensify and decline further down to ₹85-90 zone, which is a key medium-term support level.

You can consider averaging the stock at lower levels with a stop-loss placed at ₹80.

The resumption of the uptrend can encounter resistances at ₹125 and ₹135 levels. The next important resistances are pegged at ₹150 and ₹165 levels.

Published on June 14, 2015
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