Technical Analysis

Stock query: Cadila Healthcare on medium-term uptrend

Yoganand D | Updated on July 19, 2020

A strong rally beyond ₹400 will push it higher to the long-term trend-deciding level of ₹430

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

What is the long-term technical outlook for Cadila Healthcare?


Cadila Healthcare (₹377.2): The long-term downtrend in the stock of Cadila Healthcare got halted in August 2019, registering a 52-week low at ₹206.

Subsequently, the stock bottomed-out, and has been in an intermediate-term uptrend.

In early April this year, it emphatically breached a key long-term resistance at ₹300 and continued to trend upwards. Both the medium- as well as the short-term trends are up for the stock.

After testing the key resistance level at ₹370 for more than a month, the stock made a strong breakthrough on Friday by gaining 4.5 per cent, accompanied with above-average volume.

This rally has strengthened the bullish momentum, and the stock is likely to extend the uptrend. It trades well above the 21- and 50-day moving averages.

There has been an increase in daily volume over the past three trading sessions. Further, the daily relative strength index (RSI) has re-entered the bullish zone from the neutral region, while the weekly RSI continues to feature in the bullish zone. Moreover, the daily as well as the weekly price rate of change indicators hover in the positive terrain, implying buying interest.

The stock has almost retraced the 50 per cent Fibonacci retracement level of the precious downtrend. A strong rally beyond ₹400 will push the stock higher to the long-term trend-deciding level of ₹430. An emphatic break above this level can pave the way for an upmove to ₹450 and then to ₹500 over the long run.

Failure to move beyond ₹400 can pull the stock lower to the near-term support level of ₹370 and then to ₹350. A plunge below ₹350 will alter the short-term uptrend. In that case, the stock can decline to ₹320 and then to ₹300 levels.

To alter the medium-term uptrend, the stock needs to decline below ₹300. The next key supports are placed at ₹280 and ₹250. Investors with a long-term perspective can buy on decline and stay invested with a stop-loss at ₹240.

What is the outlook for Kitex Garments?

Shunmugam R

Kitex Garments (₹106.5): The stock of Kitex Garments was in euphoria in 2015 and had recorded an all-time high at ₹764.

But the uptrend failed to sustain and the stock plummeted sharply.

Since then, it has been broadly trending downwards. Across all-time frames, the stock is on a downtrend. A strong rally above ₹120 can alter the short-term downtrend and take the stock higher to ₹140 and then to ₹165 levels over the medium term.

The key resistances above ₹165 are at ₹200 and ₹230. You can consider averaging the stock on declines and exiting the stock on rallies with a stop-loss at ₹85.

The immediate supports are at ₹100 and ₹90

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Published on July 19, 2020

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