Technical Analysis

Stock query: Key barrier ahead for L&T

Yoganand D | Updated on September 27, 2020 Published on September 27, 2020

An emphatic break above ₹1,000 will strengthen the corrective up-move

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

I am a long-term investor holding the stock of L&T purchased at ₹1,319. Please advise whether I should hold, sell or average.


Larsen & Toubro (₹889.3): The primary trend is down for the stock of Larsen & Toubro.

It had recorded a 52-week low at ₹661 in late March this year and had been on a corrective up-move until the stock encountered a key medium-term resistance at ₹1,000 in June.

The significant medium-term resistance continued to cap the stock thereafter and limited the upside in mid-August as well. The stock gradually continued to decline since then, and has been on a short-term downtrend.

Though the stock took support at ₹850 and bounced back, gaining 4.5 per cent on Friday, it lacks momentum to sustain.

Moreover, the stock has vital resistances ahead at ₹950 and ₹1,000. An emphatic break above the psychological resistance level of ₹1,000 will strengthen the up-move that had commenced from the March low. Eventually, it can trend northwards to ₹1,100 and then to ₹1,200 over the medium term.

But if the stock fails to move beyond ₹1,000, it will keep vacillating within the wide band between ₹800 and ₹1,000 for a while. On the downside, a slump below the key base level of ₹800 can pull the stock down to ₹750 and then to ₹660 over the medium term. You can consider averaging the stock on declines with a stop-loss at ₹780.

I hold shares of LT Foods (Daawat). Kindly tell what the future holds for it.

Raghavi V

LT Foods (₹50.4): The stock of LT Foods conclusively broke out of a key long-term resistance at ₹30 in early June this year and continued to trend upwards.

However, after marking a 52-week high at ₹63 in early August, the stock started to witness selling pressure and began to decline. It currently tests a key support at ₹50.

A deceive fall below this base can pull the stock down to ₹44 and then to ₹40 over the short term.

Further plunge below ₹40 will intensify the selling pressure and drag the stock lower to ₹35 and ₹30.

But a tumble below ₹30 will alter the intermediate-term uptrend and drag the stock down to ₹20 over the long run.

A break above the key barrier at ₹60 will underpin the uptrend and take the stock higher to ₹68 and then to ₹75 in the medium term.

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Published on September 27, 2020
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