Technical Analysis

Stock query: Glenmark on medium-term uptrend

Yoganand D | Updated on August 02, 2020

Company has the potential to trend up and test a long-term resistance at ₹500

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

I hold shares of Glenmark Pharmaceuticals purchased at ₹530. Please let me know whether I can hold the same to get the purchase price or I should sell them. What is the target for the share?

TS Narayanaswamy

Glenmark Pharmaceuticals (₹452.2): The long-term downtrend in the stock of Glenmark Pharmaceuticals appears to have neared an end when it recorded a multi-year low at ₹168 in March 2020. Triggered by positive divergence on the daily relative strength index (RSI), the stock changed direction, and has been on a medium-term uptrend since then.

While trending up, it breached key resistances at ₹270 and ₹370, which turned into a key support and cushioned it in mid-June.

Following a short-term corrective decline, the stock found support at ₹405 and continued to trend upwards recently.

The stock trades well above the 50- and 200-day moving averages. Further, there has been an increase in daily volume over the past one-and-a-half months.

The daily RSI has entered the bullish zone backing the stock’s uptrend.

The medium-term outlook is bullish for the stock. It has the potential to trend northwards and test a long-term resistance at ₹500. A decisive break above this barrier will strengthen the uptrend and push the stock higher to ₹550 and then to ₹600.

As long as the stock trades below the crucial long-term trend-deciding level of ₹700, the downtrend will be intact. An emphatic breakthrough of ₹700 will pave the way for an upmove to ₹750 and then to ₹820 over the long run. Investors with a long-term perspective can stay invested with a stop-loss at ₹280.

You can consider averaging the stock on declines with a stop-loss at ₹330 and consider booking profits at around ₹600. T

he key supports below the immediate base level of ₹410 are at ₹370 and ₹340 levels.

What is the future prospect of Monte Carlo Fashions?

Shri Ram Sikaria

Monte Carlo Fashions (₹156.4): Since recording a new high at ₹664 in January 2018, the stock of Monte Carlo Fashions had been trending downwards.

But in May 2020, the stock marked a 52-week low at ₹128 and found support.

Thereafter, it started to consolidate sideways between ₹130 and ₹170. The upper boundary at ₹170 is limiting the upside.

A strong break above this hurdle will push the stock northwards to ₹190 and then to ₹200 in the medium term.

The subsequent vital resistances are at ₹230 and ₹250.

A further rally above ₹250 can push the stock higher to ₹280 and then to ₹300.

To alter the long-term downtrend, the stock needs to decisively break above a key long-term resistance in the zone between ₹385 and ₹400.

Such a break can push the stock higher to ₹450. Conversely, failure to move beyond ₹170 will keep the stock moving sideways between ₹130 and ₹170 for a while. The immediate support is placed at ₹144.

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Published on August 02, 2020

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