Technical Analysis

Stock query: Indian Bank records multi-year low

Yoganand D | Updated on March 08, 2020

The stock has a vital long-term support in the band between ₹60 and ₹63


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

I have shares of Indian bank at ₹107 and JK Tyre at ₹80. Should I hold or sell?

Shah Umesh

India Bank (₹69.9): The stock of Indian Bank is trading near multi-year low of ₹66 recorded in the past week.

Ever since recording an all-time high at ₹428 in November 2017, the stock reversed direction and started to trend downwards. Since then, the stock has been in a long-term downtrend.

While trending down, the index had emphatically breached a significant long-term support at around ₹210 in July last year and, thereafter, the stock continued to head southwards without an major corrective up-move. In early February the stock breached the key psychological base level of ₹100 and extended the down-move.

Nevertheless, the stock has a vital long-term support in the band between ₹60 and ₹63 that could provide a cushion in the short term.

But, a conclusive fall below this base can drag the stock to a new low. Subsequent supports could be seen at ₹55 and ₹50. That said, the daily as well as the weekly indicators and oscillators are hovering in the oversold, indicating a minor corrective up-move or a sideways movement in the short term. In that case, the stock can witness a corrective rally to ₹80.

A decisive break-out of this hurdle can take the stock northwards to ₹90 and then to ₹100 over the medium term.

If you are a high-risk appetite investors with a medium term perspective can consider averaging the stock on an upward reversal from ₹60-63 zone with a stop-loss at ₹57. Alternately, you can buy above ₹80 with a stop-loss at ₹68 and consider exiting at around ₹100.

JK Tyre & Industries (₹62.7): This stock is also in a long-term downtrend. Key long-term resistance in the band between ₹85 and ₹90 had limited the stock’s upside in mid-January this year. Since then, the stock has been in a budding medium-term downtrend. While trending down, the stock breached key supports at ₹75 and ₹68.

It trades well below its 50- and 200-day moving averages. If the stock stays below the key resistance level of ₹68 then there is a possibility of it testing the medium-term support level of ₹55. Next support is at ₹50.

But a decisive rally above ₹68 and then ₹75 can experience a short-term uptrend to ₹80 and then to ₹87 levels. You can average on a rally above ₹68 with a fixed stop-loss.

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Published on March 08, 2020
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