Technical Analysis

Stock query: Balrampur Chini Mills tests crucial resistance

Yoganand D | Updated on June 07, 2020

A decisive break above ₹126 will strengthen the medium-term uptrend

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

What is the short-term outlook of Balrampur Chini Mills? I would like to buy with a short-term horizon.

Ashish

Balrampur Chini Mills (₹124): Last week, the stock of Balrampur Chini Mills skyrocketed 24 per cent with good volume, breaking above a vital resistance at ₹110.

However, the stock is now testing a resistance at ₹126.

A decisive break above this level will strengthen the medium-term uptrend that has been in place since the stock took support at ₹68 in late March and pave the way for an upmove to ₹140 and then to ₹155 over the medium term. Also, the short-term trend is up.

The stock is trading well above its 21- and 50-day moving averages. There has been an increase in daily volumes over the past two weeks. The indicators feature in the bullish zone.

But, any likely correction will be short-lived and the stock will find support at ₹110 and then at ₹100 in the near term. A plunge below ₹100 will alter the short-term uptrend and pull the stock down to ₹90 and ₹85 levels.

You can buy on declines with a stop-loss at ₹105. A strong rally above ₹155 will push the stock northwards to ₹165 and ₹175 over the long run.

I bought the stock of AU Small Finance Bank for ₹490. Can I hold for a long term?

Ganesh MS

AU Small Finance Bank (₹482.5): The stock of AU Small Finance Bank continues to be in a medium-term downtrend since it encountered a key resistance at ₹1,200 in early March.

But, it recorded a 52-week low at ₹366 in late May and began to trend upwards, triggered by positive divergence on the daily relative strength index (RSI) and moving average convergence divergence indicator. Moreover, the weekly RSI is also displaying positive divergence, backing the trend-reversal. Other daily indicators are charting higher in line with the price action.

That said, the stock faces a key resistance ahead at ₹500 and also has a short-term trend-deciding resistance in the band between ₹550 and ₹570. Only a strong break above these barriers will alter the short-term downtrend and take the stock higher to ₹600 and then to ₹650. Failure to move beyond ₹570 will keep the stock consolidating in a wide range between ₹400 and ₹570 for a while.

Key supports are placed at ₹430 and ₹400. A slump below the second support underpins the medium-term downtrend and can pull the stock down to ₹366 and then to ₹350.

You can hold the stock with a stop-loss at ₹430 and can consider booking partial profits if the stock struggles to move beyond ₹570. Alternatively, you can consider averaging the stock on declines with a long-term stop-loss at ₹390.

Send your queries to techtrail@thehindu.co.in

Published on June 07, 2020

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