Technical Analysis

Stock query: CESC in a consolidation phase

Yoganand D | Updated on December 22, 2019 Published on December 22, 2019

A key support in the band between ₹700 and ₹715 has been cushioned

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

Can I enter CESC at the current price?

TVS Prakash Rao

CESC (₹741.5): After recording a new high at ₹921 in January 2018, the stock of CESC started to decline. Thereafter, it began to consolidate sideways in a wide range between ₹650 and ₹850.

The upper boundary at ₹850 capped the upside in late September, and again in early November.

The stock has been in a short-term downtrend within the consolidation phase. A key support in the band between ₹700 and ₹715 had cushioned the stock in late July and again in early December. The daily and the weekly relative strength indices are hovering in the neutral region; whereas, the daily price rate of change indicator features in the positive terrain, implying buying interest.

A strong fall below this level can drag the stock down to ₹680 and then to ₹650 levels in the medium term. On the other hand, a strong rally above the immediate resistance level of ₹760 will initially show a sign of bullishness and take the stock higher to ₹790, and then to ₹850 levels over the medium term.

An emphatic break-out of ₹850 will strengthen the bullish momentum and take the stock upwards to ₹900 and then to ₹920 in the long run. Investors with a medium-term perspective can buy above ₹760 levels with a fixed stop-loss, or buy at a lower level with a stop-loss at ₹650.

Conversely, if the stock plummets below the lower boundary at ₹650, it will attract selling interest and move down to ₹600 in the long term.

I bought Indostar Capital Finance at ₹242. I want to know the performance of the stock from a long-term perspective.

Mahipal Madasu

Indostar Capital Finance (₹172.1): The stock is in a downtrend across all time- frames — long, medium and short term.

On December 10, the stock registered a new low at ₹166, and now trades marginally above this level.

Although the daily indicators are displaying mixed cues, the weekly relative strength index and price rate of change indicator are showing positive divergence, implying that trend-reversal is on the cards. However, the stock price is not depicting any signs of reversal.

Hence, traders need to avoid making fresh purchase at this juncture. A fall below ₹166 can drag it to ₹150. On the upside, the stock has a significant resistance in the ₹200-215 zone.

A strong break above this zone can provide some relief if the stock can take it higher to ₹230 and then to ₹250 levels in the medium term.

A further break above ₹250 can take it northwards to the key long-term resistance at ₹275.

You can stay invested with a stop-loss at ₹160.

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Published on December 22, 2019
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