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I purchased Cyient at ₹600. Is it advisable to average the stock at current price?
TS Narayanaswamy
Cyient (₹495): After a steep fall in early March, the stock of Cyient found support at around ₹200 in late March and started to move sideways with a negative bias. Thereafter, the stock slipped below the key base level of ₹200 and recorded a 52-week low at ₹184 in late May.
Triggered by positive divergence, the stock changed direction and has been on an intermediate-term uptrend since then. Following two months of sideways consolidation, it breached a key resistance at ₹430 in mid-November and encountered a key resistance at ₹495 recently. Nevertheless, both the medium- and short-term trends are up for the stock.
Currently, the stock tests a significant long-term resistance in the band between ₹495 and ₹500. An emphatic break above this resistance can take the stock northwards to ₹525 and then to ₹565 in the medium term. Further rally above these barriers can take the stock northwards to ₹600. The vital resistances beyond ₹600 are at ₹650 and ₹700.
You can consider averaging the stock on a corrective decline with a stop-loss at ₹350. Supports are at ₹450 and then at ₹400. A strong break below the second support can pull the stock down to ₹365 levels, which is a crucial medium-term base to note. Thereafter, supports are placed at ₹300 and ₹250 levels. Investors with a long-term perspective can stay invested with a stop-loss at ₹290.
I am a long-term investor and have shares of Equitas Holdings at ₹155. I seek your opinion on whether to hold or exit it?
S Natarajan
Equitas Holdings (₹68.8): The stock of Equitas Holdings broke out of a medium-term sideways consolidation phase in the band between ₹40 and ₹60 in late November. This was after marking a 52-week low at ₹32.7 in late March.
The short-term trend is up. But the stock recently met with a resistance at ₹73.5 and began to decline triggered by negative divergence on the daily relative strength index (RSI). A fall below the immediate support level of ₹66 can pull the stock down to ₹60 in the short term. Further decline below this crucial medium-term support level of ₹60 can drag the stock lower to ₹50 and then to ₹40. You can consider averaging the stock on declines with a stop-loss at ₹47 and stay invested for the long term. A decisive break above the hurdle at ₹73.5 can push the stock northwards to ₹80 and then to ₹90.
If the stock extends the rally further above ₹90, it can test a long-term resistance at ₹100.
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