Technical Analysis

Stock query: Cadila Healthcare faces a vital barrier

Yoganand D | Updated on May 17, 2020

The stock is moving sideways in the band between ₹320 and ₹350

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

What is the technical outlook for Cadila Healthcare?


Cadila Healthcare (₹332.1): The stock of Cadila Healthcare has been on a long-term downtrend since it encountered a key resistance at ₹550 in August 2017. But, the stock found support after recording a multi-year low at ₹206 in August 2019 and reversed direction. Since then, it has been in an intermediate-term uptrend.

In early April 2020, the stock emphatically breached a key long-term resistance level of ₹300. However, it encountered another vital resistance at ₹350 and has started to move sideways in the band between ₹320 and ₹350.

A strong break above ₹350 will strengthen the uptrend and take the stock higher to ₹400 and then to the long-term trend-deciding level of ₹425.

An emphatic breakthrough of this level will alter the long-term downtrend and take the stock northwards to ₹500 over the long run. On the other hand, a slump below the lower boundary of ₹330 can pull the stock down to ₹300.

That said, a plunge below ₹300 will reinforce the bearish momentum and drag the stock down to ₹250. A further break below ₹250 can pull it lower to ₹230 and ₹200. Investors with a long-term view can buy in declines with a stop-loss at ₹240.

I would like to buy shares of Kotak Mahindra Bank. Kindly suggest the supports and resistances.

TVS Prakash Rao

Kotak Mahindra Bank (₹1,177.8): Since encountering a key resistance at around ₹1,725 in February 2020, the stock of Kotak Mahindra Bank has been in a medium-term downtrend.

After a corrective rally, the stock had met with a significant long-term resistance at ₹1,400 in late March and continued to trend downwards. It has been in a sideways consolidation phase since late March, in a wide band between ₹1,100 and ₹1,400.

A tumble below the lower boundary will strengthen the downtrend and pull the stock down to ₹1,000 in the short term. A further plunge below the psychological support level of ₹1,000 can drag the stock lower to ₹950 and ₹900. The next long-term support is at around ₹800.

Conversely, if the stock rallies above ₹1,400, it can trend upwards to ₹1,450 and then to ₹1,500. The next resistances are at ₹1,600 and ₹1,700.

Investors with a long-term view can consider buying in declines with a long-term stop-loss at ₹980 levels.

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Published on May 17, 2020

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