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Here are the answers to readers’ queries on the performance of their stock holdings.
What is the prospect of Aurobindo Pharma? Can I average it at the current market price?
Pradeep K
Aurobindo Pharma (₹599.5): The stock of Aurobindo Pharma skyrocketed 20 per cent with an upward gap, accompanied by extraordinary volume on February 19, by conclusively breaching a key long-term resistance between ₹540 and ₹550.
This rally strengthened the short- as well as the medium-term uptrend. But the stock currently tests the next vital resistance at ₹600. After encountering a key resistance at ₹835 in April 2019, the stock had been on an intermediate-term downtrend until it recorded a 52-week low at ₹389 in November 2019.
Subsequently, it changed direction, triggered by positive divergence in the weekly relative strength index (RSI). Since then, the stock has been in a medium-term uptrend. While trending up, it had surpassed a crucial resistance at around ₹470 in early January, which turned into a support and provided cushion in early February.
Notably, the recent rally has emphatically breached the 200-day moving average. The stock now hovers way above the 50- and 200-day moving averages.
Interestingly, there has been an increase in daily volume since early February. The short-to-medium-term outlook is bullish.
A decisive break above ₹600 can pave the way for an up-move to ₹650 and ₹675 levels.
Only a strong breakthrough of ₹675 is needed to alter the intermediate-term downtrend and take the stock northwards of ₹715 and ₹750 levels.
The subsequent major resistances are at ₹770 and ₹800.
On the downside, key supports at ₹550 and ₹500 can buttress the stock. But a plunge below ₹470 will mar the medium-term uptrend and pull the stock lower to ₹₹450 and ₹430 levels. You can buy the stock at the current levels with a stop-loss at ₹460.
I hold JSW Steel at ₹280 and Amara Raja Batteries at ₹750. Kindly let me know when I can exit from these stocks without loss.
Ashok Kulkarni
JSW Steel (₹281.7): After forming a strong base at ₹206, the stock took support at this level in early October 2019 and commenced to trend upwards.
Since then, it has been in a medium-term uptrend.
However, the stock recently met with a resistance at ₹295 and is in a corrective down-move. A decisive break above ₹295 can push it higher to ₹310, which is a significant long-term barrier.
To strengthen the uptrend, the stock needs to surpass this hurdle. In that case, an up-move to ₹325 and then to ₹340 is possible over the medium term.
A key support at ₹260 can cushion the stock. That said, a downward break of this base can bring back selling pressure and drag the stock down to ₹243.
The next supports are at ₹230 and ₹206. You can average on a rally above ₹295 with a stop-loss at ₹260.
Amara Raja Batteries (₹769.9): The stock faces hindrance in decisively breaking above a key resistance at ₹800.
Consider exiting with a minor profit if the stock fails to move beyond this barrier in the short term.
But a positive break above ₹800 can take it upwards to ₹830 and ₹850 levels over the short term. In that scenario, stay invested with a stop-loss at ₹740.
A tumble below the immediate support can drag it down to ₹720 or ₹700 levels.
Send your queries to techtrail@thehindu.co.in
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