Technical Analysis

Stock query: Canara Bank paused above a key base

Yoganand D | Updated on March 22, 2020 Published on March 22, 2020

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

I brought Canara Bank shares at ₹217. Should I sell or hold?

KBD Prasaad

Canara Bank (₹96.1): The stock of Canara Bank has been in a long-term downtrend since recording a new high at ₹820 in late 2010. Both the medium- as well as the short-term trend is down for the stock. In early March, it decisively breached a key long-term support at around ₹150 and continued to trend downwards. After registering a multi-year low at ₹83 in the week before, the stock started to move sideways.

The daily relative strength index (RSI) is showing positive divergence, indicating possible trend-reversal in the short term. A strong rally above the immediate resistance level of ₹110 can take the stock higher to ₹127 and then to ₹140. Only a decisive rally above ₹150 will alter the short-term downtrend and take the stock higher to ₹170 and then to ₹185. The next vital resistance is at ₹200.

On the downside, a fall below the immediate support level of ₹90 can pull the stock down to ₹83 and then to ₹75.

The next supports are at ₹70 and ₹63. You can consider averaging the stock in declines with a stop-loss at ₹80. Consider booking profits if the stock struggles to move beyond ₹150 levels.

What are the prospects of Lupin and Aurobindo Pharma?

Pradeep Kabra

Lupin (₹641.6): The stock of Lupin is in a downtrend across all time-frames — long, medium and short term. After recording a multi-year low at ₹505 on March 13, the stock formed a hammer candlestick pattern in the daily chart, which is a bullish reversal pattern. It has been trending upwards since then.

There has been an increase in daily volume over the past two weeks. But the stock now tests resistance at ₹650. A strong break above this level will pave the way for an up-move to ₹₹685 and ₹700. A decisive rally above ₹720 will alter the downtrend and push the stock northwards to ₹750 and then to ₹775 levels.

The next key barrier is at ₹800. However, a fall below the immediate support level of ₹600 can pull the stock down to ₹575 and ₹505 levels.

Aurobindo Pharma (₹347): After a corrective medium-term uptrend, the stock of Aurobindo Pharma encountered resistance between ₹600 and ₹620 in late February, and resumed the long-term downtrend. Since then, the stock has been in a short-term downtrend. Currently, it tests a key support at ₹340. A fall below this level can pull the stock down to ₹300 and then to ₹260 over the medium term.

Conversely, a strong break above ₹400 can take the stock northwards to ₹450 and then to ₹500 in the same time frame.

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Published on March 22, 2020

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